Almost £6bn worth of unit-linked investment bonds were sold in the third quarter of 2007 but after the Government changed the capital tax regime in last year’s pre-Budget report to make other financial products such as mutual funds more favourable sales have dropped to around £2bn for Q3 2008.
Regular premium investment and savings sales decreased 14 per cent year-on-year to £20m in Q3 while offshore business dropped by a quarter to £4m.
Protection and pension sales were relatively unscathed by the tough economic conditions with regular premium individual sales dropping by just 1 per cent year-on-year for both products.
The ABI puts this down to mortgage business drying up and the sales of employer-sponsored stakeholder pension plummeting respectively.
Standard Life head of pensions policy John Lawson is calling on the Government to be kind in next week’s pre-Budget report.
He said: “With the pre-budget review due next week, the savings and investment industry is hoping any tax changes announced this year will encourage saving rather than attempt to revive the borrow and spend culture. The predicted tax cuts expected to be announced next week must not be funded from tax rises to savings, for example by removing higher rate tax relief on pensions.”