Sales of individual annuities during the six months to 30 June plunged 43 per cent compared with a year ago following George Osborne’s surprise reforms to the pensions landscape.
The Chancellor announced in March that retirees will no longer be forced to use their pension savings to buy annuities, which offer a guaranteed income for life but have been criticised for offering poor value.
Prudential chief executive Tidjane Thiam said: “There has since been considerable disruption to industry sales of individual annuities as the government, pension providers, advisers and consumers work through the implications of these changes. In the transitional period created by the Budget, there has been, understandably, an increase in the number of customers who have deferred converting their pension savings into retirement income.”
His comments came as the group posted first-half operating profits of £1.5 billion, an increase of 17 per cent on a year earlier.
Shore Capital analyst Eamonn Flanagan described the results, which came in ahead of City hopes, as “excellent”.
He added: “The strength of the group’s business model is clearly demonstrated in the first half despite the foreign exchange, regulatory and political headwinds it faces.”
Profits in the US grew 18 per cent to £686m, helped by higher fee income, while currency effects constrained earnings growth in Asia to 3 per cent.
Thiam said: “In the first half of 2014 we faced some challenges with significant and sudden depreciation of the currencies in some of our ‘sweet spot’ markets.
“We remain confident in our ability to produce profitable growth over the long term and continue to create value for our customers and shareholders.”
Investors will receive an interim dividend of 11.19p a share on 25 September, up from 9.73p a year ago.