Britain’s biggest pension provider today called for a shake-up of regulations to make it easier for funds to invest in UK assets, boosting returns to customers and coming to the aid of a moribund stock market.
Phoenix Group, which looks after £283 billion on behalf of 12 million policy holders, is on the up. It generated cash of £2 billion for the year, up from £1.5 billion.
That frees it up to pay a final dividend of 26.65p a share, up 2.5%, and to promise investors it plans to increase that divi each year. CEO Andy Briggs has been pushing regulators and the Government to incentivise pension funds to invest in UK shares and UK assets in general. On average UK pension funds have just 4% of their assets in UK shares, one reason, say critics, why the stock market is so moribund.
Foreign pension funds have a much higher stake in their home countries stocks.
“Markets have globalised, so funds have only about 10-20% of their money in UK assets. It used to be more like 70%,” Briggs said. “Other countries incentivise funds to invest more in domestic assets. We need better tax breaks on pensions, tilted towards the home market.”
Greater economic stability in the UK would also help, he noted, after a period that has seen several changes in prime minister and criticism of the Bank of England for mixed messages on inflation and interest rates.
Chairman Nicholas Lyons says more attention needs to be paid to pensions in general given longer life spans.
He said: “The pensions savings gap in the UK is a growing societal problem…We know that people can only save for their retirement if they have access to good work over their longer lives. That is why we are playing a role in promoting good work through Phoenix Insights, working in collaboration with others to influence government policy.”
Phoenix shares rose 8%, 40p, to 528p today. That leaves the business valued at £5.3 billion. Profits rose from £544 million to £617 million.
Briggs said: “We have achieved our 2025 growth target two years early with £1.5billion of new business cash delivered by our Standard Life business — a new record. We delivered over £2billion of cash generation and maintained our resilient balance sheet, and our strong performance has enabled the board to recommend a 2.5% dividend increase.
