In the midst of reporting group pre-tax profits of £185 million, and a 64% increase in intermediary pension and drawdown new business sales to £2.91billion in the first half of 2017, UK pension insurer Royal London said that some of its rivals were failing customers who utilized the 2015 pensions freedoms.
The freedoms grant pensioners the ability to move their assets into drawdown funds instead of buying an annuity, a former legal requirement.
According to Financial News London, the boost in intermediary pension sales can be attributed to investors shifting to the drawdown options.
In a statement, Royal London’s Chief Executive Phil Loney addressed concerns over companies that were importing annuity market sales procedures into the drawdown world, suggesting some providers could be “sleep-walking their existing non-advised pension customers into their own in-house drawdown offerings, repeating some of the poor practice seen in the historic annuity market.”
After saying that the insurer plans to develop a better value for the drawdown option as well as tools for clients utilizing the “non-advised route,” Loney noted that the FCA could make this type of competition possible if they opened up the market. He also urged regulator the Pensions Dashboard to boost competition in the UK pensions arena.
“It is an important project designed to help customers by allowing savers and their advisers to have a comprehensive view of their pension savings and entitlements in one place to determine their retirement outcome. The dashboard could also provide a useful starting point for those advisers and customers seeking to obtain better value for money by consolidating numerous small pension pots,” he said. “There is currently no legislation to ensure that all pension providers make their data available to the dashboard, which may create gaps in the data available, causing the project to fail. We believe it is imperative that the Government legislates to mandate participation in the Pensions Dashboard as a key step to underpin greater competitive rivalry in the UK pensions sector, which will in turn drive better value for money for customers.”