Royal London: ‘Don’t abandon tax relief system’ as pension business soars

Loney-Phil-Royal London-2013

Royal London has posted a 40 per cent growth in new life and pensions sales in 2015, as its chief executive warns the Government not to “abandon” the pension tax relief system.

In its latest results for the year to 31 December, the provider reports new life and pensions business of £6.8bn, up 40 per cent from the same period in 2014.

Workplace pension sales are up 27 per cent to £2.8bn, while individual pension sales are up 39 per cent to £1.9bn.

Drawdown sales continue to increase, and are up 67 per cent from 2014 at £1.3bn.

Royal London’s advised protection business generated £502m in sales, an increase of 49 per cent year-on-year.

Its direct-to-consumer arm, launched in 2014, saw a massive 385 per cent increase to £165m.

Funds under management stood at £84.5bn as at 31 December, up 2.7 per cent from £82.3bn the previous year.

Ascentric, Royal London’s platform saw assets under administration go from £8.9bn to £10.1bn, a 13 per cent increase over the year.

Royal London chief executive Phil Loney took the opportunity to reiterate his concerns about moving to a pensions as Isas model of tax relief, saying those in favour of a taxed-exempt-exempt model are “clearly thinking too short-term.”

He says: “There remains a considerable risk that ‘Isa-style’ pensions, even with an incentive thrown in, will simply turn people away from long-term saving. Savers will lose the certainty of a tax relief system which ensures their saved income is not taxed twice, and be thrown into an Isa-style system where they need to believe that future generations of politicians will not renege on the deal and tax their savings when they come to withdraw.

“I strongly urge the Chancellor to build on his excellent record of introducing the pension freedoms by reforming the current tax relief system and not abandoning it.

“He should not take the huge gamble of introducing Isa-style pensions, which would be reckless at a time when the numbers saving into a workplace pension are finally growing, following the successful introduction of automatic enrolment.   This is not the time to turn the system upside down.”