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.