AV., AJB, XPS: Should you go for these pension services stocks?

June 29, 2022 04:08 PM AEST | By Abhishek Sharma

AV., AJB, XPS: Should you go for these pension services stocks? — Image source: © Coffeekai | Megapixl.com

Highlights:

About 20 million employees participated in a workplace pension in 2021, according to the latest numbers.

The real test remains to be seen as the cost-of-living crisis may force some employees to stop their pension contributions.

Almost nine in ten (88%) eligible employees were participating in a workplace pension in 2021, as per the latest numbers from the Department for Work and Pensions (DWP) on Tuesday. The figures, which translated to about 20 million, show how the overall trends in participation had gone up since 2012, when the automatic enrolment into workplace pensions kicked off.

Since its inception, the private sector has driven the participation in automatic enrolment, even though the public sector's contribution has also remained high, the department said.

About 20 million employees participated in a workplace pension in 2021

Eligible employees aged 40 to 49 had the highest participation in 2021 at 90%. On the other hand, those in the 22 to 29 age group had the lowest participation at 86%, which is still a significant increase over the 24% reported in 2012.

Experts cited by a Yahoo report have said that the COVID-19 pandemic hasn't derailed the auto-enrolment, but the real test is yet to arrive amid the cost-of-living crisis. Due to the soaring energy and food bills, employees could stop their pension contributions to be able to manage their household budgets.

In regard to the latest numbers on pension auto-enrolment, let us explore some stocks related to pension services and analyse their investment prospects.

Aviva Plc (LON: AV.)

Aviva offers various financial services like insurance and pension services. It is a leading pension provider in the UK and is a constituent of the FTSE 100 index. The stock has provided a negative return of 22.62% to investors over the past one year. Its earnings per share (EPS) currently stand at 0.50, while the market capitalisation is at £11,753.84 million. The company's stocks closed at GBX 419.40 on Tuesday.

AJ Bell Plc (LON: AJB)

The company provides online investment platforms as well as stockbroker services and is a constituent of the FTSE 250 index. In the six months to 31 March 2022, the company added over 35,500 new customers, and its revenue climbed up to £75.5 million. The company is hopeful of improvement in the revenue and profit margins in the second half of the year.

With a market capitalisation of £1,150.95 million, shares of AJ Bell closed at GBX 280.00 on Tuesday. It currently has an EPS of 0.11, and its one-year return stands at -34.61%.

XPS Pensions Group Plc (LON: XPS)

The UK's largest pure pensions consultancy firm is a part of the FTSE All-Share index. It recently announced its annual results for the year to 31 March 2022, posting the highest year-on-year organic growth since listing. Its total group revenue reached £138.6 million, or 8% higher over the previous year, while the statutory profit before tax went up by 48%.

Shares of XPS Pensions Group closed at GBX 133.00 on 28 June 2022. The company has a market cap of £272.85 million, and the one-year returns are at -5.67%.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.