Tempus on Phoenix Group - Part 14 Dec 2025 17:22
The Tempus column in The Times have justed posted this following article…….
While the stock market’s judgment is not infallible, there is more than meets the eye to the fact that shares in Phoenix Group have been at a consistently higher level since last week’s budget.
On the face of it the chancellor, Rachel Reeves, had bad news for Phoenix and other pension providers. She capped the national insurance contribution (NIC) relief on salary-sacrificed pension premiums at £2,000 per employee per year. Anything over that would now attract the same NIC tax as the rest of a worker’s pay.
This may discourage some higher paid staff from making those extra contributions, denying Phoenix profitable income. The chief executive, Andy Briggs, warned that it would make it harder for individuals to achieve financial security in retirement. And theincreased administrative complexity for employers would do nothing to enhance the appeal of running these schemes.
But the impact on the Phoenix bottom line will be limited. The change will not take effect until April 2029, giving the pensions sector plenty of time to adapt. And pension contributions, including those of more than £2,000 a year, will still be free of income tax, so that incentive will remain.
As far as Phoenix shares are concerned, after the budget the salary sacrifice issue has been overshadowed by Reeves’s measures as a whole, which have been viewed in the City as non-inflationary and creating more fiscal headroom than expected. That has fuelled the belief that the Bank of England will continue cutting interest rates. The consequent rise in gilts (UK government bonds) has improved the value of Phoenix’s long-dated liabilities, a key factor in the value of its shares.
Such abstruse calculations are part and parcel of analysing this company, which began in its modern form 22 years ago, buying and managing undervalued life funds that had been closed to new business. After the low-hanging fruit had been snapped up and there were no longer so many funds to buy, the business evolved into a broad-based retirement savings and income business with four arms.
The first, pensions and savings, manages defined-contribution workplace pension schemes. The second, retirement solutions, handles defined-benefit schemes and annuities. Thirdly, with-profits manages legacy pensions and savings policies. Finally, Europe and “other” covers Ireland and Germany.
The seeds of radical change were sown seven years ago, when Phoenix bought the venerable Standard Life, which houses the first two divisions as the future growth engines. This will be formally recognised in March, when the group’s name will change from Phoenix to Standard Life. The legacy operations will provide a predictable and efficient cash stream to fund dividends and reinvestment.
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