Dutch insurer Aegon has announced it is to halt it’s bulk annuity business in the UK. The company is looking to cut it’s cost base by 25% in it’s life and pensions business with the aim of improving it’s return from capital. Instead of offering annuities the company will “focus on retirement and workplace saving products.” In a statement the company said that… “…these markets have a strong potential for growth in the years ahead, particularly in light of the continued trend among employers to move from defined benefit to defined contribution pension plans in the United Kingdom, and given the increasing number of people approaching retirement and seeking income solutions.”
However the company will still invest in SIPPS in the UK private pensions market. By dealing with these more lucrative products, the company hope to generate a “cash flow of £650 million between 2010 and 2014.” However the switch has caused some unions to fear that there could be job losses as a consequence of the changes. Aegis said that while it was pleasing to note that Aegon were committed to staying in the UK, the scale of the change would come as a blow to its members. Some annuity advisers and supporting staff may lose their jobs as a consequence.
Aegis said that… “…at this point, we have no details on how these changes and cost savings can be achieved. We need to see a breakdown of the company’s proposals before we can assess how they will affect specific areas.”
