A growing workplace pensions business has helped boost annual profits at Royal London by 19 per cent.
The mutual insurer’s annual results show that its has taken on 930 new workplace pension schemes over the past year, helping boost its operating pre-tax profits to £249m to 31 December 2023, up from £210m the year before.
As a mutual these increased profits will mean a distribution of £163m in April, to two million eligible customers with life and pension policies who are members of the society. This is an increase on the £155m previously paid.
These 930 new schemes mean that the insurer is now running the workplace pensions for an additional 240,000 employees. Overall its workplace pension business saw new business sales increase by 4 per cent. Royal London says this reflects a significant increase in pension consolidation volumes, alongside the new schemes won.
It adds that its workplace pension business continues to be supported by the relative performance of its flagship ‘Governed Range’, which attracted inflows of £3bn in 2023 with AUM of £60bn.
Royal London is one of the few providers to only offer a GPP option to employers rather than also offering a master trust solution, but this has not hampered its growth ambitions.
Expanding on its financial results, Royal London says its workplace pension business had been supported by continued investment in technology and digital solutions. This includes an online pension transfer hub, a mobile app, an online financial wellbeing service and a state benefits entitlement calculator – developed in partnership with its charity partner Turn2us.
Royal London says that its success in the workplace pensions market reflects the importance employers place on “supporting their employees’ financial wellbeing, and partnering with digital-first providers who have a strong sense of purpose.”
However it added: “Although we are making progress, not all of our technology projects have delivered at the pace we would have liked, but as we enter 2024 we are releasing new pensions technology that makes it even easier to interact digitally with Royal London.”
While Royal London has expanded its group pensions business it says it has seen new business sales decrease by 17 per cent in the individual pensions market. It says higher interest rates have impacted those defined benefit transfer volumes, although more customers chose to stay with Royal London as they moved into retirement. It also adds that the cost of living crisis has also led to customers withdrawing more money from income drawdown pots.
Royal London group chief executive Barry O’Dwyer says: “In 2023, we welcomed 930 new workplace pension schemes, allowing us to support a further 240,000 new pension savers. The breadth and depth of our investment range attracted over £4bn in net inflows, as we grew our membership base, and delivered strong active investment performance while expanding our fund range and international reach.”
