More than £37 million of this year’s £114 million ProfitShare will benefit customers who saved into or took some retirement income from a pension with Royal London last year. Members will receive payments ranging from thousands of pounds for those with larger pots who have been saving for years, to smaller amounts for those just starting to save. These payments will effectively wipe more than a third off the charges for a quarter of a million Royal London pension savers.
Last year Royal London increased the pool of customers who share in its profits to include all unit-linked pension and drawdown members. This means that anyone automatically enrolled into a Royal London workplace pension scheme or taking an income from an eligible Royal London pension will get a slice of the mutual’s profits to give their pension savings a boost. More than 700,000 additional members are set to benefit in this way.
Depending on how well the business performs each year Royal London will aim to give its pension customers a share of its profits alongside its with-profits customers who have been benefiting from a share of the profits since 2007. Our aim is to award a ProfitShare of between 0.15% – 0.25% of the unit-linked value of the qualifying customer’s plan. The extra money for pension savers will be invested to help their retirement savings grow further.
A customer who joined their workplace pension scheme last year aged 30, and contributes £200 per month retiring at age 65, could benefit from a boost of £4,584 or 4% - taking their pot from £116,324 to £120,908 - assuming ProfitShare of 0.20% is added to their plan every year.
If this customer then starts to take an income of £500 per month from their pension they could have this level of income until age 88. With ProfitShare at 0.2% each year they could have this level of income until age 90 giving them an extra two years' worth of retirement income.
Phil Loney, Chief Executive of Royal London, commented: “As a member-owned business, our customers come first and ProfitShare is a powerful demonstration of the extra value we can give to our customers. It offers a tangible benefit and is real proof that we have their interests at the heart of our business. We are delighted that more than one million Royal London members will this year be sharing £114 million in Profitshare payments. In simple terms, when Royal London does well so do its customers.”
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