Royal London said its 2016 operating profit before tax rose 16% to £282 million as its new life and pensions business rose 28% to £8.7 billion on a present value of new business premiums (PVNBP) basis and its funds under management rose 18% to £100 billion.

Despite the rise, Royal London chief executive Phil Loney said that “across the whole of the workplace pensions market, contributions to pensions are too low.”

Royal London, the UK’s largest mutual life, pensions and investment company, employs more than 1,000 in Scotland and includes the former Scottish Life and Scottish Provident businesses.

The mutual firm said its “ProfitShare” after tax was up 63% to £114 million.

Loney said: “We are now a top-three new business player in several key areas and group funds under management grew to £100 billion …

“Royal London’s operating profit has also showed strong growth despite operating in a low interest rate environment which tends to depress the profitability of insurance products.

“This performance has translated into a 63% increase in the ProfitShare for 2016, to £114 million enabling us to allocate a healthy ProfitShare to our with-profits members and to deliver on our commitment to start allocating ProfitShare to pension members …

“Royal London now has over one million members.

“Numbers continue to increase rapidly as employees who join workplace pension schemes become members of Royal London, alongside self-employed customers buying our personal pensions and people using our well-regarded drawdown product to manage their retirement income.

“For quarter of a million Royal London pension savers the allocation of ProfitShare will effectively wipe more than a third off their annual management charges.

“This is a helpful boost to growth for Royal London customers but it remains the case that, across the whole of the workplace pensions market, contributions to pensions are too low.

“Automatic Enrolment has been an undoubted policy success but there is no coherent plan to increase contributions to levels that will produce an adequate income when those workers retire.

“The government has just concluded a review of the detail of its Auto Enrolment policy, but this key issue was ignored.

“We know that for most people an 8% pension contribution, made by themselves and their employers, falls well short of providing an adequate level of income in retirement.

“It is time for government to bite the bullet and adopt a clear policy about saving at realistic levels beyond 8%.

“Doing so would help to secure an appropriate level of income in retirement for generations of pensions savers.”