STRATEGIC REPORT
11
Just Group and our peers in the industry are actively engaging with government to ensure any new arrangements are created in a regulated environment that does not allow members of defined benefit pension schemes to receive a poor deal and that regulatory arbitrage is eliminated.
89% o dfnd bnft pnin s hms a e coe t nw mme s ad ic esnl t ftr a c ul (%)
100
80
INDIVIDUAL RETIREMENT INCOME MARKET Introduction
60
Guaranteed Income for Life (“GIfL”) products are bought by individual customers to convert some or all of their accumulated pension savings into a guaranteed lifetime retirement income. The solution provides people with peace of mind from the security of knowing the income will continue to be paid for as long as the customer and, where relevant, for as long as they or, typically, their spouse lives. In the UK, GIfLs traditionally offered an income payable without reference to the individual’s health or lifestyle, and were differentiated only by reference to a limited number of factors such as age, postcode, premium size and, prior to 31 December 2012, gender. An individually underwritten GIfL takes into account an individual’s medical conditions and lifestyle factors to determine their life expectancy. People who are eligible and purchase an individually underwritten GIfL typically achieve double-digit percentage increases in income compared to purchasing a GIfL which is not individually underwritten. Pension customers are encouraged to compare the GIfL offer provided by their existing pension company to those offered on what is the open or external market. In March 2018 the Financial Conduct Authority (“FCA”) introduced rules requiring pension companies to provide customers with an external GIfL quotation showing the best quote available from the external market alongside the quotation from the incumbent firm. They have subsequently announced rules which firms must have implemented between November 2019 and January 2020 to strengthen this requirement and, where the customer is eligible, require firms to provide a medically underwritten comparison. This should provide new opportunities for Just Group as we compete in the open market when these customers choose to shop around; this is our addressable market as we do not have an existing base of pension savings customers. The open market maintained a 50% share of the total GIfL market, unchanged from 2018 (source: ABI). Providing security and peace of mind
40
20
2018 2019 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Closed to new members (open to benefit accrual)
Source: The Purple Book 2019, PPF Closed to future accrual
E p ce got i D d -r sig tascin (£b)
40
30
20
10
Buy-in/Buy-out Source: Just analysis, Hymans Robertson, LCP Backbook acquisition 2011 2012 2013 2014 2015 2016
2017 2018 2019
(forecast)
E t ra Gf mre (£m)
2,500
2,000
1,500
1,000
500
2015
2016
2017
2018
2019
Source: Just analysis, ABI
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