For the first time, APE sales broke the £15 billion barrier in 2006, reaching a total of £15.46 billion. Individual pensions regular premium new business once again performed strongly, increasing by 45 per cent from £2.1bn in 2005 to £3.0bn in 2006. The pensions tax simplification regime, which came into force on ‘A-Day’, 6 April 2006, was the main driver of this growth.
ABI deputy director general Stephen Sklaroff says:
“The Government’s A-Day reforms have helped to stimulate growth in personal and group pensions, encouraging many more people to begin building up funds for their retirement. The challenge now is to get the design of the new Personal Accounts right. Changes will be needed if good existing pension schemes are not to be undermined.”
But Hargreaves Lansdown head of pensions research Tom McPhail says: “The industry is guilty of eating its own tail. The numbers look great, but focussing on new business figures without looking at the overall net position including outflows is an exercise in self-delusion. If the ABI wants to present a credible, balanced picture then it should also tell us what the overall net position of its members is.”
ABI spokesman Jon French says: “We are working to improve the way we collect data to better reflect net business and hope to have made progress on this by the end of the year. To an extent switching is good for customers as it shows they are shopping around to find the best deals for them.”