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Sales slump as standard and friends put focus on profits

Life and pension business dropped significantly at Standard Life and Friends Provident last year.

Total UK life and pension sales for Standard fell to £929m last year from £957m in 2003 on an annual premium equivalent basis. This equates to a 13 per cent drop as 2004 figures cover 13.5 months because of a change to Standard’s accounting date from November 15 to December 31.

Standard has cut annual bonus rates across the majority of its with-profits policies despite a 10.4 per cent calendar year return on its with-profits fund. The life with-profits bonus has been cut from 2.5 to 2 per cent. Conventional life and pension with-profits ann-ual bonuses have been cut from 0.5 and 0.75 per cent to 0.25 per cent on both. Standard says 93 per cent of its mortgage endowment policyholders are on red warning letters, the same figure as last year.

Chief executive Sandy Crombie says the company has cut back on less profitable life and pension business such as stakeholder to focus on more lucrative contracts such as Sipps. Standard cut commission on regular-premium pension business and stakeholder in the third quarter, further hitting sales.

Crombie says: “As inten-ded, we have written less life and pension business in the UK than in the previous year but we have identified a number of opportunities for profitable growth in the Sipp, investment and protection markets.”

Gross sales at Standard Life Investments rose by 12 per cent to £3.7bn.

Friends Provident’s pension business fell by 7 per cent to £227.8m from £245.5m. Individual pension business fell by 10 per cent and group business fell by 7 per cent. Managing director Ben Gunn says IFA business was up by 7 per cent but the closure of its direct salesforce and uncertainty ahead of A-Day hit sales.•Bonus background, p49


Pension edge: John Moret

I am not sure who coined the phrase “Simple solutions seldom are.” However, Peter de Savary hit the nail on the head when he said: “The great fault all over the world in business is that people overcomplicate and forget that the main ingredients for success are common sense and simplicity. I use lawyers and accountants as little as possible.” To whom he could have added civil servants.

Willing participants

With all the difficulties that a combination of the gift with reservation and pre-owned assets rules have caused for lifetime estate planning with property – especially the principal private residence – many have effectively given up on this and turned to consider what can be done to at least ensure that the nil-rate band of the first of a couple to die is used. The saving in inheritance tax if this is successfully achieved is not to be sneezed at. It is the princely sum of 105,200.

Huge hike for fund firms

The Financial Services Compensation Scheme is forcing fund firms to pay 27m to cover the risk of a fund management group going bust this year.


Guide: what you need to consider for your auto-enrolment project

In this guide, Johnson Fleming reveals what items you need to understand to gauge the impact of auto-enrolment on your business. The guide focuses on: the impact that your auto-enrolment scheme will have on you; assessing your workforce; understanding your staging date; reviewing your current provision; and modelling contribution levels and costs.


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