Pensions staff axed after exodus from annuities

The troubled pensions provider Just Retirement yesterday admitted it will be forced to cut jobs across its 800-strong workforce due to radical reforms in March’s Budget.

The company said sales of individual annuities were now running at about half the levels seen before the Coalition overhauled the industry. From next year, retired workers will be handed more freedom with their pension pots and will no longer have to buy an annuity.

The reforms saw the company’s shares fall more than 40 per cent in about three hours after the Budget and they now sit at 160p, significantly below the 225p they were at when it floated in November.

The chief executive Rodney Cook said Just Retirement now planned to strip out £14m in costs in the next financial year and would be investing £5m before the launch of new products to offset weaker demand for individual annuities.

He said the group will be starting a consultation with staff ahead of an unspecified number of job cuts, which will be spread across its business. Executives will also give up 10 per cent of their salaries.

Mr Cook added: “Although operating conditions have become much tougher since the Budget, with sales at around half of pre-Budget levels, we are rapidly adapting our model to the new environment. I am confident that, by continuing to offer customers a fairer deal in retirement, we can deliver further shareholder value.”

Investors and analysts responded positively to the news with shares rising almost 2 per cent to 160p. The company managed to grow its annuity sales 34 per cent to £288m during the three months ending 31 March, before the impact of the reforms kicked in.

Fahad Changazi at Nomura said: “We are encouraged to see Just Retirement taking proactive steps in the face of a paradigm shift in the UK annuity market. The reduction in costs should mean the adverse impact on new business margins is constrained.

“Increased defined-benefit scheme sales and lifetime mortgages should also incrementally benefit earnings while investments could potentially source further new business.”

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