Tuesday 27 June 2017

Life and pensions sales plunge 28pc to run at half 2007 levels

Laura Noonan

Laura Noonan

ANNUAL sales of new life and pensions products are running at just half their 2007 levels. The bleak picture was revealed in fresh industry data compiled by actuarial consultants Milliman and circulated to insurers this week.

The figures show new life and pensions sales plunged another 28pc in 2009, having collapsed 29pc the previous year. The latest fall meant sales of new life and pensions products were almost €1.1bn last year, against about €2.1bn in 2007.

Both figures are calculated on an Annual Premium Equivalent basis, which includes the full value of regular premiums and 10pc of the value of single premiums sold in a given year.

The collapse comes as brutal investment markets continue to scare consumers away from life insurance policies, while declining levels of disposable income prompt individuals to delay taking out new pensions.

The full-year figures do, however, represent a moderate improvement from the first three quarters of 2009, when new life and pensions sales were running at about 35pc below their 2008 levels.

Such significant swings were possible in the fourth quarter as it included the October ‘pension season’, when the selfemployed ploughed money into their post-retirement pots ahead of tax deadlines.

The biggest end-of-year turnaround was in single premium pensions, which closed the year up 21pc despite being down 11pc at the nine-month mark.

Dramatic An industry insider last night attributed the dramatic swing to concerns about impending taxes on pension lump sums, which prompted a surge in early retirements in the months after the Budget.

Those early retirees went on to draw down their entire pension pots so they could secure their tax-free lump sums. They then invested the remainder of the funds into post-retirement pension policies, triggering the higher levels of single premium sales.

New sales of regular premium pensions also recovered somewhat in the final three months of the year, posting a fall of 18pc for the full year against a fall of 46pc in the first nine months.

Sales of regular premium life insurance policies, meanwhile, dipped 29pc over the year, a marginal improvement on their 39pc fall in the first nine months.

Single premium life insurance sales, which have been hit hardest by plummeting investment markets, closed the year down 42pc after being down 55pc at the nine-month point.

Details on the 2009 falls come as the life insurance industry continues to lobby against the 1pc levy on all life and pensions sales introduced last August.

Most of the insurers are bearing this cost themselves and they argue sales in their industry could be further depressed if the levy remains and has to be passed on to consumers.

The market-wide figures are expected to be borne out over the coming weeks as Aviva, Standard Life, Irish Life & Permanent, Zurich and New Ireland/ Bank of Ireland Life give details on their performances.

Irish Independent

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