LIFE offices have reported significant falls in group pension business in 2009, blaming the economic downturn.
Insurers say pay freezes, less recruitment and general fiscal tightening in corporate budgets led to the falls.
Axa saw its corporate pensions revenues fall 15 per cent in 2009, to to £287m on an APE basis, despite securing a number of large pension schemes over the year. Axa says this reflected a combination of the repositioning of the business away from initial commission towards a fee based model as well as the impact of recession-driven recruitment, pay and contribution freezes on new member contributions.
Scottish Life says its the present value of new business premiums on its group pensions fell by 19 per cent in 2009.
Aviva saw a 55 per cent fall in its group pensions business in 2009, while Friends Provident saw a 26 per cent fall in its corporate pensions sales last year.
Friends Provident head of corporate James Ward says: “For most providers the largest part of their new business comes from their existing schemes through either new members and payrises. People have not been hiring and have had pay freezes, which is why all life offices have seen an impact that has been considerable.
“We will also see less bonuses going into pensions in future as the tax changes kick in.”