Life and pensions group Royal London unveiled a record year for new business yesterday, as its outspoken boss Phil Loney slated George Osborne’s move towards pension ISAs, warning they risked putting people off long-term savings.
Loney said: “It has never been true that all of the (pension taxation) reform options are better than the status quo. It is my belief that proponents of the “ISA-style” (or “TEE”) pension taxation are clearly thinking too short term. There remains a considerable risk that “ISA Style” pensions, even with an incentive thrown in, will simply turn people away from long term saving.”
Loney said there was the danger that savers would “lose the certainty of a tax relief system which ensures their saved income is not taxed twice, and be thrown into an ISA-style system where they need to believe that future generations of politicians will not renege on the deal and tax their savings when they come to withdraw”.
The Royal London chief said that for the Chancellor to introduce ISA-style pensions would be a “huge gamble” and “reckless” when the numbers saving into a workplace pension were finally growing following the successful introduction of automatic enrolment. “This is not the time to turn the system upside down,” Loney added.
It came as the firm, which employs more than 1,100 in Scotland, based across Edinburgh and Glasgow, revealed it had achieved “outstanding new business growth” in 2015.
Its annual results showed that new life and pensions business jumped 40 per cent to £6.8 billion, with group pensions up 27 per cent at £2.8bn and individual pensions up 39 per cent at £1.9bn.
Various efficiency initiatives at the group saw an improved profit margin of 1.8 per cent – up 29 per cent. Total group funds under management at end-December 2015 were up 2.7 per cent at £84.5bn.
Royal London said over the past four years life and pension sales had doubled, while assets under management had grown 92 per cent driven by organic growth and successful acquisitions.
Consumer new business volumes more than quadrupled in 2015 to £165m from £34m at December 2014, the company highlighting the success of its pre-paid funeral plan product with the Co-op.