Life assurance and pensions sales down 28% so far in 2008

SALES OF life and pensions products have fallen 28 per cent so far in 2008 compared to last year, new figures show, as consumers shied away from making large-scale financial transactions.

Data compiled by Dublin actuarial consultants Life Strategies shows that the annual premium equivalent (APE) value of new business - the benchmark measurement used to gauge activity in the industry - fell to €1.3 billion, down from €1.84 billion in the first nine months of 2007.

APE comprises annual premiums, such as protection and savings products, and a tenth of the value of single premiums.

Sales of single premiums - lump- sum products sold by life and pensions firms - have been particularly weak this year, plummeting to less than €3.7 billion in the first nine months. This is down from almost €7 billion in the same period last year - a fall of 47 per cent.

Investment-only products, which are bonds and funds without a life assurance or pension element, have fallen 40 per cent, to €1.9 billion. Sales of singlepremium Personal Retirement Savings Accounts (PRSAs) are down 24 per cent on last year.

Although pension sales are suffering, sales in the life business have been the hardest hit, according to the figures from Life Strategies, which does not break down sales by company. They show that the picture for the life and pensions industry has worsened as the year has progressed and uncertainty in the global financial system has intensified.

Investors have moved away from life and pension investments linked to the equity and property markets due to falling share prices and declining property values.

However, two life and pensions companies, Hibernian and Zurich, warned yesterday that Irish people were not financially prepared for either recession or retirement.

According to Zurich (formerly known as Eagle Star Life), young adults are leaving it too late in life to begin a pension. Of the 58 per cent of 24- to 34-year-olds surveyed by the company who said they did not have a pension, half said they did not know when they would begin saving for one, despite the fact that their average desired retirement age was 58.

"There is clearly a reality divide between what young adults want in terms of their future aspirations and what they are doing now to achieve that," said Zurich pensions director Brendan Johnston.

Almost half of those surveyed said they were concerned about their job security for the first time.

Meanwhile, a survey by Hibernian, owned by the Aviva group, found that just 6 per cent of 35- to 54-year-olds believed the Government would provide an adequate level of income in retirement.

Mark Reilly of Hibernian said Irish investors were "among the shrewdest internationally" and were still prepared to invest for their future despite the turmoil in financial markets. The €223.30 a week State pension only provided "a bare-bones safety net for Ireland's grey army", he added. Irish group-managed pension funds have lost more than one-quarter of their value in the past 12 months.