Auto-enrolment boosts Royal London

Continuing pension reform has boosted Royal London with auto-enrolment helping to boost new life and pension sales to a record first half of £4.2 billion and to hike profits up by 20 per cent to £138 million.

The former Scottish Life business, a mutual which employs 1000 people in Edinburgh, said: “An approach to setting up automatic enrolment schemes based on personal contact rather than employer self-service means that Royal London continues to attract good quality business.”

Growth is expected to slow down after smaller schemes have enrolled and the initial auto-enrolment staging process comes to an end.

Chief executive Phil Loney said: “Today we are announcing a strong set of results delivered against the uncertain backdrop of the UK referendum on EU membership and continuing low interest rates. Despite the reduction in interest rates, profit margins have held up well, allowing continued investment in the business to support the development of our product and servicing capabilities.

As the auto-enrolled market matures we are beginning to see a new trend; the growth of a secondary market as advisers recommend schemes move to take advantage of better quality scheme administration or investment options.

Royal London has benefited from this trend, taking on schemes that have already auto-enrolled with other providers. This ‘flight to quality’ introduces competition to the market and will result in better outcomes for scheme members.”