New pension rules will lift Standard Life while Q1 sales defy forecasts

Standard Life yesterday predicted it will benefit from a raft of regulatory changes as it reported a smaller-than-expected dip in its first-quarter sales.

Investec analyst Kevin Ryan said: “The star was the core UK business, which was down 9 per cent at £3.6bn but ahead of consensus of £3.3bn.”

Shore Capital analyst Eamonn Flanagan described the first-quarter performance as “reasonable” given the current economic climate and changing regulatory landscape.

“The 13 per cent decline in worldwide new business was slightly better than our 14 per cent forecast,” he said, adding that the growth in group assets under management, from £198.4bn to £206.8bn, was also ahead of expectations.

Finance director Jackie Hunt said Standard Life expects to benefit from the introduction of auto-enrolment, which will require employers to automatically enrol their staff in a pension scheme. The shake-up will be phased in gradually, with the largest employers having to comply with the new rules this autumn, and the group estimates it could add an extra 400,000 savers to the 35,000 pension schemes it runs for corporate clients.

“We’ve had unprecedented levels of interest from corporates looking at their pension provision,” Hunt said.

Analysts have said Standard Life is also well positioned ahead of the implementation of the retail distribution review (RDR) at the end of this year, which will ban providers from paying commission to financial advisers for selling their products. Instead, consumers will have to pay a fee to cover the cost of advice.

Barrie Cornes, analyst at Panmure Gordon, said: “The market remains challenging but the company is probably one of the best equipped in terms of the challenges posed by the introduction of the RDR later this year. This is as a result of it largely operating on an RDR basis and having been doing so for a number of years.”

Hunt said there were concerns that less affluent customers would be unwilling or unable to pay for financial advice up front, but the group’s new MyFolio range of risk-based funds offered an alternative.

“It guides people through their choices and will absolutely play into the market for people who don’t want to pay a full advisory fee.”