Scottish Life figures hit as drawdown sales tumble

MUTUAL life and pensions firm Royal London yesterday reported a 10 per cent fall in first-quarter new business as its Scottish Life brand, which accounts for the bulk of sales, was hit by a slide in demand for “drawdown” pensions.

However, sales at its Bright Grey and Scottish Provident protection businesses jumped 45 per cent to £107 million following a marketing drive aimed at pulling in more business from advisers.

Royal London chief executive Phil Loney said sales of drawdown pensions, which allow customers to leave their pension funds invested in the market instead of buying an annuity, had been affected by a reduction in the maximum income customers can take from their plans, while advisers are taking a “cautious approach” to the products because of continuing uncertainty about the performance of equities.

Scottish Life’s group pension sales also suffered in comparison to the first quarter of 2011, when its figures were boosted by the addition of one “very large” scheme. As a result, group pensions new business was down 11 per cent year on year, but up 16 per cent when the effect of that one scheme was stripped out.

Overall, new business at Edinburgh-based Scottish Life dropped 12 per cent to £542m. For the group as a whole, new business totalled £761m for the first quarter, down from £843m a year earlier.

Loney said: “Market conditions generally remain uncertain and difficult in 2012, with some growth in group pensions, individual pensions slowing, and the protection market flat.”

• Legal & General yesterday said its finance director, Nigel Wilson, will replace Tim Breedon as chief executive in June.

Breedon, who has been with the group for 25 years and took the helm in 2006, announced his plans to retire last year.