Royal London has said it has benefited from advisers switching employers to its auto-enrolment service as its group pensions business was up 66% for the first six months of 2016.
For the six months to 30 June, Royal London’s group pensions new business was £1.9 billion, up 66% from the same period last year.
This increase in pensions business was helped by ‘a new trend’ in auto-enrolment whereby employers decide to switch providers, chief executive Phil Loney (pictured) said.
‘As the auto-enrolled market matures we are beginning to see a new trend; the growth of a secondary market as advisers recommend schemes move to take advantage of better quality scheme administration or investment options,’ he said.
‘Royal London has benefited from this trend, taking on schemes that have already auto-enrolled with other providers. This “flight to quality” introduces competition to the market and will result in better outcomes for scheme members.’
However despite the jump in new pensions business, Royal London’s Ascentric wrap platform saw gross sales down 10% year on year at £1.07 billion.
Royal London said this fall in Ascentric’s sales was in keeping with the ‘wrap sector as a whole’ and ‘against the background of market volatility in the first half of 2016’. Assets under administration for Ascentric were £10.8 billion, up 7%.
Royal London Asset Management (RLAM) saw gross inflows of £2.3 billion, up from £1.9 billion in the same period last year. This was ‘particularly strong’ given the market uncertainty around the referendum, the company said.
Over the last six months, Royal London’s operating profit was up 20% meanwhile at £138 million, which was ‘particularly’ helped by new business in its pensions, protection and RLAMdivisions.
Loney added the results come despite Brexit uncertainty.
‘Today we are announcing a strong set of results delivered against the uncertain backdrop of the UK referendum on EU membership and continuing low interest rates,’ he said. ‘Despite the reduction in interest rates, profit margins have held up well, allowing continued investment in the business to support the development of our product and servicing capabilities.’
However, he added the business continues to expect a ‘slowing of the rate of growth in workplace pensions’ as smaller businesses go through auto-enrolment.
Source: Citywire