Pensions groundhog day? Royal London warns explosion in drawdowns could lead to a repetition of poor practices

 
Oliver Gill
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George Osborne Visits Primary School In Yorkshire
Pension freedoms were introduced in 2015 as a landmark policy of the then chancellor George Osborne (Source: Getty)

The boss of Britain's biggest insurance mutual has warned the pensions sector is facing a repetition of the poor practices that culminated in the mis-selling of tens of thousands of annuities.

Royal London chief executive Phil Loney said there has been a “surge” in pensioners drawing down lump sums without taking advice.

Over a million pension pots have been accessed since former chancellor George Osborne introduced his landmark pension freedoms reforms in April 2015. And Loney said the trend of not taking advice was “concerning”.

He added:

We are also concerned that some providers may be 'sleep-walking' their existing non-advised pension customers into their own in-house drawdown offerings, repeating some of the poor practice seen in the historic annuity market.

Read more: Here's why the FCA could meddle with Osborne's pension freedoms legacy

In July, the UK’s financial regulator revealed plans to intervene into the pension drawdown market. The proposals were met with hostility from some sides, with experts claiming authorities were trying to “put the pension freedom genie back in the bottle”.

Success

Today's comments from Loney came as Royal London posted bumper half-year figures. New business rose by 45 per cent to £6.1bn and operating profit increased by 34 per cent to £185m.

Funds under management grew by six per cent to £106bn.

Loney said: “Our strategy remains to deliver excellent value for money by focusing on creating the best customer outcomes and best customer experiences at really competitive prices. This philosophy is rooted in our status as a mutual. The growth in profit and new business sales we announce today underlines the continued success of our strategy.”

Read more: Record lump sum take-up risks widespread pension poverty

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