An emerging secondary auto-enrolment market has helped Royal London boost its workplace pensions business by 66 per cent in the first half of 2016.
Group pensions business grew to £1.9bn in the six months to June 2015, up from £1.2bn over the same period last year. The surge helped the provider grow its new life and pensions business by 39 per cent to £4.2bn in H1 of 2016, compared to £3bn in H1 of 2015.
Funds under management rose by 11 per cent to £93.8bn from £84.5bn at the end of last year, while EEV operating profit grew by 20 per cent.
Royal London says an approach to setting up automatic enrolment schemes based on personal contact rather than employer self-service has helped it to attract good quality business in the secondary AE market.
Royal London group chief executive Phil Loney says: “We have indicated that we expect a slowing of the rate of growth in workplace pensions for some time and this indeed is beginning to come through in the new business figures. As smaller employers are now starting to auto-enrol the revenue from these schemes is lower than in earlier phases, which were dominated by larger schemes. Nonetheless the number of schemes continues to grow and new business growth in Group Pensions was ahead by 66 per cent on the same half-year period in 2015.
“As the auto-enrolled market matures we are beginning to see a new trend; the growth of a secondary market as advisers recommend schemes move to take advantage of better quality scheme administration or investment options. Royal London has benefited from this trend, taking on schemes that have already auto-enrolled with other providers. This “flight to quality” introduces competition to the market and will result in better outcomes for scheme members.”
