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Aegon UK issues pension earnings warning as sales drop

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Aegon’s UK operation saw year-on-year pre-tax earnings drop 4 per cent in the second quarter this year, from £26m to £25m, as new life sales plummeted 16 per cent.

The insurer’s Q2 2015 results, published this morning, show new life business dropped from £226m to £190m, driven by “lower traditional pension production”. Annuity sales across the sector have been hammered following the introduction of pension freedoms in April.

And the firm has warned of “continued pressure” on pension earnings resulting from the automatic enrolment charge cap and the new retirement flexibilities.

It says: “The pension flexibility regulation that came into effect in April 2015, resulted in higher outflows from Aegon’s back-book in the second quarter of 2015.

“Aegon expects this trend to continue in the second half of 2015.”

The insurer says earnings from its life business, at £20m, and pensions, at £4m, were “stable” during the period.

Over £1bn flowed onto the firm’s platform, the firm says, driven by a combination of new money and “upgrading” existing customers onto the offering. Total assets on the platform now sit at £4.6bn.

The average policy size on-platform is around £72,000, “more than double” the average for the traditional book of pensions and bonds, it adds.

Fee revenues were £111m during the period, down 2 per cent on Q2 2014, although fee revenues on the platform were up 56 per cent in Q2 2015 compared to the previous quarter.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Little wonder really as no one I know will use them for new company pensions since they stopped paying renewal on GPP business but still charge the client the same amount. Consequently we were having to charge the clients for servicing, this meant that they were being double charged. So we moved the business from Aegon and do not use them as they are ripping off the clients.

  2. I just took a cursory look over the last couple of years annuity rate tables in Money Facts and it is interesting to see that Aegon have been consistently below average and in some cases rock bottom of the rates available in the open market. I suppose this shows how broken the system was before really. For them to benefit so greatly from Annuity sales in the past, whilst so clearly uncompetitive, indicates that something was definitely wrong. Financial Advisers would not have been recommending them surely? You have to assume that it was non-advised, back pension book business, where clients obtained the simple non competitive quote and just accepted it. Nice work if you can get it for an insurer it would seem, especially by the resultant drop in profits now.

  3. If this is largely due to a fall in business levels from independent advisers then they only have themselves to blame.

    I would be intrigued to know just how big an influence IFA business has within all providers, if possible MM, PFS or anyone who has this info? I think the time is here in terms of using said influence to garner support for our cause, particularly with the FSCS fee situation. If they no longer pay us for their new business, then they need to do more to help us on other fronts. They have a voice and should start to use it effectively!

  4. You ain’t seen nothing yet. Aegon may be a poor example, but I recon all pension providers are going to feel the pain. Decent pensions have been curbed by constant fiddling, AE has to be a loss leader. I don’t see any profit there for a good few years yet – at best. The balance sheets of these providers are going to look a bit anaemic ere long.

  5. Hope someone at Aegon is reading these comments. I’ve recently carried out a thorough review of the pensions market as part of our company’s group and individual proposition. If anyone can check out Aegon’s adviser website and really understand what they offer, I will be astounded. Nobody I spoke to was able to give me an overview of the company’s proposition. They refused to provide me with details about their ARC proposition unless I signed up for the platform. They failed to explain what the differences between their Retiready in the Workplace, Workplace ARC and standard GPP are. The fund availability and performance information is buried down in a Morningstar link. After this considerable review, I’ve been unable to get a good idea of what Aegon offers and how it fits into the pensions market today. For this reason, it’s the only active provider that I am completely unable to recommend. No wonder they are losing market share if this is their approach.

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