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Rush to income drawdown lifts Aegon’s earnings

Adrian GraceIncreased demand for income drawdown helped Aegon UK report a 37% rise in earnings in the final quarter of the year over the same period in 2013.

The Edinburgh-based company has spent £5 million on its platform over the last three months, bringing in a further £300m to take assets under administration to £2.7 billion against £1.3bn in the previous year. Overall underlying earnings before tax rose 37% to £22m.

This comes on top of £3m spent in the third quarter on its Aegon Retirement Choices platform. The investment has focused on improving the functionality of the platform.

The company expects more growth as the new pension rules come into effect in April giving more people more choice over their savings pots. More are likely to opt for drawdown.

The pensions business showed a sharp improvement in business, posting £16 in underlying earnings before tax for the full year 2014, compared to the £9m loss in the full year 2013.

Aegon acquired 49,000 new clients in the quarter and added 300 auto-enrolment schemes.

The protection business also continued to grow following the launch of the new whole of life product in Q4 contributing to the 25% increase in protection volumes relative to Q4 2013 and the increase of 20% relative to the full year compared to 2013.

Chief executive Adrian Grace (pictured) said: “As the legislative revolution continued to unfold across the pensions industry at the end of 2014, we drove forward with the development of our multi-channel platform providing solutions for advisers, workplace based employees and non-advised customers, to and through retirement.

“Our research has shown us that our target consumers don’t have access to advice or have chosen to deal directly through the internet. These consumers are confused with thousands of funds to choose from and the complexity of the investment market and its options. We’ve tried to simplify things for them by offering just five fund choices which have been designed to reduce market volatility and help them achieve some certainty of income in retirement. This is all done with clear transparent charging. The Retiready service is backed by Blackrock and Aegon, two of the strongest names in financial services.”

“Later this year, and in response to the forthcoming pension flexibility changes, we plan to introduce pension solutions for consumers that will help meet one of their greatest needs in retirement – certainty of income.”

“In the last year we have focused on making saving as simple as possible for all of our non-advised customers through the launch of our digital pension and ISA service, Retiready, that can be managed on mobiles and tablets.

“Retiready was developed for non-advised customers looking to simplify and consolidate their pension and ISA savings. It provides a simple to understand solution to meet their saving needs while protecting them against market downturn and volatility. It also allows UK consumers to determine their readiness for retirement with a unique score out of 100. This gives consumers an indication of how on track they are in meeting their retirement goals. If they’re not on track, Retiready provides easy-to-understand tools to help them make informed choices to improve their score and take control of their financial future.

“It’s been less than a year since launch so it’s still early days but we are pleased with progress so far. At the end of 2014 we started actively advertising. Thousands of people have now checked their Retiready score to see how on track they are towards their target retirement income. As a result the number of new customers is growing rapidly and we expect to see this upward trend continue throughout 2015.

“At the tail end of 2014 we endeavoured to bring pensions and the way people interact with their pensions, into the digital age with the roll out of promotions for our pension and ISA on Retiready. This kicked off with the launch of an iPad offer which saw customers receive a free iPad when they transferred or started a pension through our digital service Retiready. This was followed more recently by the launch of our 0% service charge for life on Retiready ISAs opened by 5 April 2015.

“It’s market leading offers like these that will start to improve the level of engagement we see from customers. And solutions like Retiready that will help facilitate this engagement, be it through an adviser, an employer or without advice – on a mobile, laptop or tablet.

“And with pension flexibility changes around the corner, getting people engaged with their retirement planning is key.”

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