Phil Loney, chief executive of the mutual which this year dropped its Scottish Life brand, said: "With the charge-capping and other reforms introduced by the Government to the group pensions market, we are beginning to see the first signs that this headline-grabbing policy will have precisely the opposite consequence to that which is intended."
Mr Loney said pensions minister Steve Webb had said pensions companies' total revenue would be cut by £200million over a 10-year period, but the provisions already made by the major players suggested this was a gross under-estimate.
He went on: "This seems to me to be an unacceptable margin for error in the government's understanding of the impact of its actions, and the size of the impact is driving many insurers to introduce employer fee arrangements to mitigate against the impact of further reductions in the price cap. I hope that present and future governments will think carefully about these consequences before lowering the cap further...."
Royal London was reporting a 45 per cent drop in embedded value pre-tax profit after taking a £61m provision for the effects of the charge cap and other changes.