Aegon is to withdraw from the bulk annuities market as it seeks to cut back the cost of its UK businesses.
The Dutch insurer is taking steps to improve return on capital by targeting cost reductions of 25% in its life and pensions business. It will instead refocus the business around at retirement and workplace saving products.
A statement from Aegon said: “These markets have a strong potential for growth in the years ahead, particularly in light of the continued trend among employers to move from defined benefit to defined contribution pension plans in the United Kingdom, and given the increasing number of people approaching retirement and seeking income solutions.”
Aegon will continue to invest in the UK personal private pensions market (self-invested personal pensions). By refocusing investment in this area and dropping the bulk annuity side of its business, it aims to improve its return on capital from 2.7% in 2009 to between 8% and 10% by 2014, generating cash flow of £650 million between 2010 and 2014.
But it is feared these changes to the business will lead to the loss of jobs in the UK. Union Aegis, said that while it was reassuring Aegon remained committed to the UK the scale of the change was a blow for its members.
A statement released by Aegis said: “At this point, we have no details on how these changes and cost savings can be achieved. We need to see a breakdown of the company’s proposals before we can assess how they will affect specific areas.”
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