(Adds detail, management comment)
LONDON, May 12 (Reuters) - Annuities provider Just Retirement Group Plc’s sales volumes are running at around half the levels seen before the British government announced an overhaul of the pensions system, it said on Monday.
In an annual budget speech in March, finance minister George Osborne said the pensions system would be liberalised, effectively scrapping a requirement for pensioners to swap their retirement savings pots for an annuity.
Annuities are products offered by insurance companies to retirees, paying them a guaranteed income, usually until they die.
The reforms hit the shares of Just Retirement, which sells individual underwritten annuities (IUA), which pay a relatively high rate to people with unhealthy lifestyles or poor health because they are not expected to live as long.
In a trading statement, Just Retirement said IUA sales volumes were currently running “about half pre budget levels.”
However, sales for its fiscal third quarter - the three months ended March which mainly covers a period before the budget - were 288 million pounds ($485 million), up by a third from a year earlier.
Chief Executive Rodney Cook said annuity demand was “stabilising” following an initial drop after the reforms were announced and the outlook was “not as bad as some forecasts of the death of the annuity”.
Following the pensions reforms, Just Retirement is launching a reorganisation that will cost around 5 million pounds but create savings of 14 million over the next financial year.
The company has also pledged to invest 5 million pounds towards developing new products.
Investors welcomed the restructuring, pushing the company’s shares up nearly 6 percent to 166.54 pence in morning trade.
$1 = 0.5938 British Pounds Reporting by Chris Vellacott. Editing by Simon Jessop and Mark Potter