Just Retirement sales hit by new pensions freedoms

New pensions freedoms continue to cause pain for Just Retirement, which has reported a 22 per cent fall in total sales as the government's shake-up of the annuities market takes effect.

About half of the group's market capitalisation was wiped out following pensions changes announced in the Budget last year. These gave savers new freedoms to avoid buying annuities, the income-generating pension products that had been the main source of Just Retirement's profits.

In a trading statement on Tuesday, the company said its total sales fell 22 per cent to £1.1bn in the nine months to March 31, compared with the same period a year ago.

This was driven by a 59 per cent decrease in sales of individually underwritten annuities, to £380m. The group's push into corporate pensions - where sales increased tenfold in the period to £448m - offset some of the fall.

"The period before the introduction of the new pension freedoms was always likely to be tough for our industry and so it has proved," said Rodney Cook, chief executive. He added that considering the structural changes in its market the group had put in a "creditable performance".

Speaking shortly after Ros Altmann, a pensions and retirement policy expert, was appointed pensions minister in the cabinet reshuffle, Mr Cook said Just Retirement was prepared for further changes as the new government progresses plans for a secondary market in annuities for savers who bought policies before the rule change.

"We expect the general election result will see a continuation of government policy in our core markets," he said. "Moreover, we expect that HM Treasury will continue to work towards a secondary annuity market, which we believe will create new opportunities for Just Retirement."

The group, backed by private equity house Permira, specialises in providing pensions for people with unhealthy lifestyles or illnesses.

Its defined benefit division, which provides "bulk annuities", deals that allow employers to offload their pension scheme liabilities to an insurer, had its second highest quarterly performance on record. Analysts have cautioned about the "lumpy" nature of bulk annuities, but Mr Cook said the pipeline of business "remained strong".

"Medical underwriting is progressively becoming the default choice for employee benefit consultants seeking best value for the trustees of smaller schemes," he said.

In early trading in London, shares in Just Retirement held steady at 174p, a fall of just over 0.5 per cent.

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