Sun Life sees new business leap by 35%

AXA SUN LIFE, one of the UK's biggest life insurers, yesterday posted a 35 per cent jump in new business as savers fled from low-interest savings accounts to investment policies offering a higher income.

The company, a division of Sun Life & Provincial Holdings, said sales of lump sum bonds had been exceptional, leaping by 109 per cent to pounds 435.5m. Lump sums overall jumped 56 per cent to pounds 904.7m.

Executives said the jump in new business reflected concern among savers about low interest rates, which now pay little over 5 per cent on a typical 90-day account.

Savers needing income had begun shifting money into share-based investments without wanting to take big risks with their capital. That had fuelled demand for bonds and "cautious" funds offered by AXA Sun Life, executives said.

However, the company voiced serious concerns about the Government's plans for stakeholder pensions, the new type of pension meant to encourage more people to save for retirement.

Les Owen, chief executive of AXA Sun Life, said the proposals may fail in their objective because they focus solely on low charges, failing to take account of the cost of selling the products.

"At the end of the day someone needs to spend time persuading individuals that they have a need to make more pension provision for themselves. If the cost of that is not built in to the pension, then there won't be any significant increase [in the number saving]."

As with other insurers, AXA Sun Life has also been taken aback by an intervention by the Financial Services Authority, the City's senior regulator.

The FSA has warned advisers against selling expensive pensions to customers who may later want to switch to a new stakeholder plan. The concern is that they may get poor value when they switch, because charges will have eaten into early contributions.

AXA Sun Life fears this will create a "pensions planning blight". Afraid of being accused in future of mis-selling, financial advisers would be deterred from selling the products.

"There is a danger that people won't do anything now to save even when it's in their interests - just because the charges might be lower in two years' time," Mr Owen said.

Sun Life & Provincial shares closed up 27p at 543.25p.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence