Prudential has announced that the new pension reforms have help its Pensions business to a huge 60 per cent increase in profits last year. It announced last year that the changes had seen a steep 46 per cent decline in its annuity business, but this was echoed throughout the industry. What sets Prudential apart is the uptick in their pension business.
Where less diversified annuity providers failed through not having a drawdown option, Prudential were already geared up for the shift in pensioners’ behaviour to favour drawdown over annuities.
Notable losers were Friends Life who decided not to offer drawdown. The take over from Aviva did offer them an option but our clients are telling us it’s not being offered as a smooth transition.
Prudential do have their highly regarded PruFund range in their armoury though. These fund are favoured by Financial Advisers for their clients as they offer a less volatile option for those entering drawdown.
The PruFund range of funds are designed to spread investment risk by investing in a range of different assets, and is managed by Prudential Portfolio Management Group Ltd (PPMG).
In addition, each of the funds aim to protect investors against some of the ups and downs of the markets by using a unique smoothing process. This aims to smooth the peaks and troughs of direct investment and provide less volatile and more stable returns over the medium to long-term in line with each funds objective and allowable equity parameters. These funds offer different levels of risk and potential return.
The increase in profits have allowed Prudential to pay their shareholder a ‘special’ dividend of 10p a share, last seen in 1970. The news is surprising when considering more recent volatility in markets and the economic climate. It’s a perfect marketing tonic for anyone looking for confidence in a provider for their drawdown funds.