Funeral demand drives sales at Royal London

funeral

Royal London has seen its sales soar this year as a spike in the cost of funerals drives people towards products that can help them save for their own send-off. 

The pensions provider saw sales of its pre-paid funeral plans soar 41pc in the six months to June 30 as costs spiral, with the Scottish government last week proposing to help families struggling with funeral debt. 

"The cost of funerals has been rising more than the cost of houses," chief executive Phil Loney said. "The cost of land and the cost of church services is going up as [there are] more and more deaths and more and more people."

The average UK funeral now costs around £3,897, UK insurer SunLife said last year, more than double a decade ago and far outstripping inflation and wages. 

Phil Loney, chief executive of Royal London, said demand for its pre-paid funeral plans has soared as costs of funerals rise

As older savers look for products that can help pay for their funerals, more retirees are also looking to so-called drawdown policies as a way to generate retirement income following pension freedoms introduced by former Chancellor George Osborne in 2015.  

Royal London said new sales on individual pensions and drawdowns were up 64pc to more than £2bn during the period, helping lift pre-tax profits up 34pc to £185m. 

George Osborne announced pension freedoms in 2015, which meant retirees no longer need to buy an annuity to guarantee an income for life, instead looking at alternatives such as drawdown policies.

"The pension freedoms have been one significant source of the growth," Mr Loney said. "Annuities used to be the way most customers set up a retirement income [but] drawdown has now become the retirement income vehicle of choice." 

However the group warned that its pensions division will see a slowdown in the second half of the year as the Government's automatic enrolment programme - which means all UK companies have to enrol staff onto a pension scheme by in 2018 - reaches an end. 

Its asset management arm, meanwhile, saw funds under management rise 6pc to £106bn during the period. 

The firm is in the process of setting up a subsidiary in Ireland in response to Brexit, with Mr Loney insisting that the business expects "to maintain strong capitalisation and profitability as the UK leaves the EU."