JLT issues profit warning as pensions business slows
The insurance and reinsurance broker warned that group profits would be hit by a third quarter slowdown in its UK employee benefits business, partly due to “uncertainty created by government-led changes to the UK occupational pensions market.”
Full year revenues in that part of the business are expected to fall by a mid-to-high single digit percentage figure from 2014. Trading profit for that division will be in the low to mid-teens in millions of pounds, JLT said.
Shares were trading down 2.5 percent by 1020 GMT, making the company one of the biggest fallers on the FTSE mid 250 index.
Recent British pension reforms mean people aged over 55 no longer need to use their pension savings to buy an annuity, which gives a fixed income for life. Instead, they can either invest in other savings products or just spend the cash.
Changes to commission payments introduced following a recent British review were also having a “greater impact than anticipated” on trading profits, the company added.
The changes force financial advisers to charge clients a fee for their services, rather than being paid commission by asset managers, reducing the chances of firms paying higher commissions to have advisers push their funds.