Prudential has reported a 28 per cent surge in UK sales during the first quarter but warns reforms announced in the Budget will have a “significant” impact on individual annuity sales.
The provider’s Q1 interim management statement, published this morning, reveals overall UK sales rose from £185m in Q1 last year to £237m in the first three months of 2014.
This increase was predominantly driven by bulk annuity new business. The insurer wrote £73m of bulk annuity sales in Q1 this year, having written no new business in Q1 2013.
Individual annuity sales were £36m in Q1, 35 per cent lower than the £55m figure reported last year. The provider says this reflects an “overall downturn in the market” as savers chose to defer retirement.
And the firm anticipates further “disruption” to the market on the back of the Budget reforms.
“We intend to continue to work closely with the Government, regulators and other industry participants to ensure that the new pensions system that emerges in April 2015 produces appropriate outcomes for our customers,” Prudential says.
“Alongside other market participants, we anticipate a disruption to sales, which could be significant, in the individual annuities market as the industry works with all stakeholders to define the new pensions system.”
The provider also saw corporate pensions sales drop 25 per cent, from £53m to £40m, while onshore bond new business increased 9 per cent, from £45m to £49m.