29th March 2016
Retirees are increasing opting for annuities to fund their retirement, the latest figures from the Association of British Insurers show.
The trade body has issued the figures one year on from pension freedoms showing that investors have accessed around £6bn in retirement savings.
Around half have taken the full amount with the rest taking the pension as some form of income,
The ABI says that annuities are also starting to see a revival in popularity and the number sold outstripped income drawdown products for the first time in the most recent quarter with 21,200 sold, worth £1.1 billion, compared with 19,700 drawdown policies though these were worth £1.4 billion.
The figures since April 2015 show that
£3 billion has been paid out in 213,000 cash lump sum payments, with an average payment of £14,800.
£2.9 billion has been paid out via 835,900 income drawdown payments, with an average payment of £3,500.
£4.2 billion has been invested in 63,600 income drawdown products, with an average fund of £66,000.
£3.3 billion has been invested in around 61,700 annuities, making the average fund invested nearly £53,000.
The ABI’s Director of Policy for Long Terms Savings and Protection, Dr Yvonne Braun, said:”One year on from the pension reforms, the freedoms are settling in and working as intended. This is a credit to providers who worked incredibly hard to get ready for the changes with less than a year to implement them.
“Following some initial pent up demand, the number of people accessing their pension pot as cash in one go has settled down. People are taking a sensible approach and considering how they will pay for their whole retirement. Annuity sales are beginning to see a revival, with more annuities than drawdown products sold in the last quarter. This shows people still really value a lifelong guaranteed income.
“Our key challenge remains ensuring people save enough for their retirement. With increasing life expectancy and declining final salary pension provision, we must turn our attention to helping customers grow bigger pots.”