Adrian Grace, chief executive of the UK arm of the Dutch insurance group, said he was “highly supportive” of the Chancellor’s annuities shake-up that will allow those aged more than 55 to take their pension pot as a lump sum.
He said the reforms, announced in the last Budget, would give people freedom to do what they wanted with their money, raise taxes for government, stimulate the financial adviser market and gradually trigger additional revenues for life and pensions companies.
Unveiling a 37 per cent jump in UK earnings to £22 million in the final quarter of 2014, Grace said: “It’s the right thing for the consumer. It gives people back choice and flexibility to do with their money what they want.”
He said financial advisers would be “a lot busier helping people through the minefield of what is available to them, which is better than putting people into annuities who did not want them. “It will also benefit life and pensions companies like us because we will be able to deliver solutions on how to make the money [withdrawn] last a lifetime. It’s not that simple any more.”
His view contrasted sharply with critics who have branded the reforms “irresponsible”, particularly as pensions minister Steve Webb has said publicly that he is relaxed about pensioners spending their would-be annuities on Lamborghini sports cars if they wanted.
Phil Loney, chief executive of Scottish Provident-owning Royal London, claimed earlier this month that Osborne’s reforms could be “an infamous example of political bungling” that led many people approaching retirement to “make the wrong, often irrevocable, decisions about their retirement”.
However, Grace was sceptical about such risks to financial risks in old age. “If people have saved up all their lives for a nest egg [in retirement], those blowing it on a Ferrari would be few and far between.
“People who have prudently saved don’t suddenly get to 55 and blow it. I don’t buy that argument at all.”
It came as the Aegon parent group, which bought Scottish Equitable in 1994, posted a near-19 per cent rise in profits to €562m (£415m) in the fourth trading quarter. That compared with €473m in the same period of 2013.
Group life sales were up 9 per cent at €523m, while accident and health and general insurance sales lifted 14 per cent to €226m, driven by a strong performance in the United States.
The stronger US dollar also contributed €25m to earnings. In the UK, protection policy volumes increased 25 per cent compared to the same quarter of 2013, and rose 20 per cent over the full year compared to the previous 12 months.
The UK subsidiary also gained about 49,000 new customers in the quarter, with 300 new pension schemes added through auto-enrolment.
Over the full year, earnings in the UK rose £18m to £92m, while group annual earnings eased to €1.86bn from €1.96bn. Aegon announced the sale of its Canadian business in the period as well as its stake in La Mondiale Participations in France.
Grace declined to rule out further asset sales, but said nothing was imminent. Aegon continued to review all its businesses “and where we have got under-performing (businesses) we will take action”, he added.
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