WALES: Your MONEY

Jul 8, 2007

By JEREMY GATES

A MILLION people are retiring each year - which partly explains the surprise merger of Saga, the travel and insurance group for the over-50s, and the AA, the drivers' friend in a roadside emergency.

It creates a pounds 6.2bn giant: both are big providers of financial services and 40% of the AA's 15m members are 50-plus.

As the new firmstarts with debts of nearly pounds 5bn, many employees await healthy payouts: Saga staff who invested pounds 20 in October 2004 collect pounds 10,500, AA boss Tim Parker waltzes off with pounds 40mafter three years' highly controversial work and Saga boss Andrew Goodsell hits the jackpot with pounds 128m.

But what about the customers, who must buy the products to generate revenue to service those enormous debts?

Says Aron Thompson, Head of Insurance at online price comparison site uSwitch.com: "The merger creates a combined customer base of 17m.

"The new group will be a key player in the industry, especially in the over-50s car insurance market. With more than 20m people over the age of 50 in the UK, it would be disappointing if car insurance products from Saga were in any way scaled down or diluted by this merger.

"Historically, the over-50s market, and in particular the over- 75 market, has been a poor risk group for motor insurers. As a result, it has been badly served by the industry and Saga has dominated the market for some time."

Will older folk be a little miffed to see these household-named companies being used to unlock untold riches? Surely many of 3,000 staff axed by the AA since 2004 won't touch the new venture with a bargepole.

The charity Help The Aged, launched in 1969, has finally started its own financial services group, Intune, and Aron Thompson thinks it might challenge the private equity honchos of Saga-AA.

"While motor policies offered by Intune and Saga are very similar, Intune feeds all its profits straight back to Help The Aged, which will no doubt appeal to this audience," he says.

INFORMATION: Saga (0800 015 6256); Intune (0800 083 4875 and www.intunegroup.co.uk, or by letter to 207/221 Pentonville Road, London N1 9UZ); Just Retirement (0845 302 2287); uSwitch.com (0800 093 0607).

The website www.pensioncalculator. org.uk, provided by the FSA and the Association of British Insurers, shows the level of savings needed to meet specific income expectations in retirement.

(c) 2007 Daily Post; Liverpool. Provided by ProQuest Information and Learning. All rights Reserved.

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