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Life offices predicting lower growth in 1998

Life offices are predicting a slowdown in new business in 1998 compared with the boom in the last two years.

According to a Money Marketing survey of life offices, growth in life, pension and investment sales is set to slow to 8 per cent in 1998 after two years of 25 per cent-plus growth.

Despite the slowdown, 1998 is still set to be a record year. But the survey found a wide disparity between life-office forecasts for the overall market.

Norwich Union, Friends Provident and Allied Dunbar believe that market growth will be between zero and 2 per cent this year while Clerical Medical and Scottish Equitable see the market expanding by 15 per cent or more.

NU claims that its forecast has been influenced partly by misleading data collection by the industry since the Pensions Act came into force.

NU press officer Liz Watson says: "The Act created a lot of switches from GMPs to GPPs.

"It was not strictly new business but the way that life offices were asked to provide data to the ABI made it look like new business.

"It gave the figures in 1997 a one-off boost that won&#39t be repeated."

Scottish Life this week reported sales growth of 35 per cent in 1997 but marketing consultant Alasdair Buchanan says: "We and the market in general have had tremendous growth in 1997. It is difficult to see that happening again in 1998."

Life offices are most bullish about personal pensions, with a growing belief that the negative impact of the transfer scandal will be outweighed by a realisation that people are failing to provide for retirement.

Full details of survey, p34

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