TaxPersonal TaxTax changes fire life policy sales

Tax changes fire life policy sales

30% rise in sales after changes introduced

Changes to the tax rules for pension has seen sales of policies up by nearly
30%, the Association of British Insurers
has revealed.

Life and pensions new business rose 29.5% to ?15.5bn annual premium
equivalent – a standard industry measure of new regular premiums plus 10% of new
single premiums, the Financial Times reported.

But concern has also arisen that a large amount of life assurers new business
was not actually new, but represented existing policies being transferred from
other life companies.

Total single premium individual pensions new business rose 54% to ?18.76bn,
while new regular premium individual pension business rose 45% to ?3bn.

Independent life assurance analyst, Ned Cazalet, estimated that the surge in
lump sum pension business was overwhelmingly to do with an increase in
transfers.

He said that if single premium pension business was being transferred,
regular premium pension policies would also be expected to move.

‘The reason why it is important that a lot of this stuff is transfer business
is because the business was bought and paid for by life companies the first time
round. These things take a long time to pay back. This is a real worry for the
sector…. a lot of this stuff is the old stuff sloshing around in [a game of]
pass the parcel.’

Further reading:

Pru
on offensive over endowments

ABI:
Government must not risk pensions future with poor design of Personal
Accounts

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