Statements made by the Association of British Insurers claiming annuity sales recovered in the last quarter of 2015 have been branded “incorrect” by the Tax Incentivised Savings Association’s policy strategy director.
Adrian Boulding said the ABI’s data - which showed a considerable increase in annuity sales from its life company members - failed to take into account the full retirement product market.
He cited data from the Financial Conduct Authority which showed considerably more new people bought income drawdown products than annuities in the last three months of 2015.
Speaking today (Tuesday 17 May) at an event on the self-invested personal pension market, he said: “If you saw a statistic earlier in the year that said [annuity sales] had turned the other way, that was an incorrect stat pushed out by our good friends at the ABI.
“Amongst ABI members, sales of annuities exceed sales of income drawdown - well I guess that’s not entirely surprising, because a lot of [providers] like James Hay, AJ Bell and Hargreaves Lansdown are not in those ABI stats.”
The ABI’s release in March stated annuities proved more popular with new customers than income drawdown products in the fourth quarter, with 21,200 sold - worth £1.1bn - compared with 19,700 drawdown policies - worth £1.4bn.
However, in a report published a month later, the FCA reported that, of the total pensions accessed in the fourth quarter, just 17 per cent were used to purchase an annuity.
Full cash withdrawals by new customers - via UFPLS, flexi-access drawdown or small pot lump sum - accounted for 52 per cent of transactions, while 29 per cent went into drawdown policies.
Mr Boulding also said more people are buying drawdown products without advice than are buying annuities without advice.
When FTAdviser contacted the ABI for comment, it pointed to a statement released in 2015, which read: “The FCA data covers a larger number of firms than the ABI data, and the FCA’s data request was intended to capture the options that pension providers’ customers had taken, rather than sales.
“In many cases, the FCA data does not include external annuity sales, and for some firms, the FCA data includes customers continuing in drawdown as well as those starting drawdown,” it stated.
“The FCA drawdown data also includes a greater proportion of full cash withdrawals and withdrawal of tax free lump sums, where this is enabled via drawdown.”
Mr Boulding also announced that Pensions and Lifetime Savings Association’s Pension Quality Mark body, of which he is chair, will launch a new retirement quality award over the summer months.
He said he hoped this would direct trustees of workplace pension schemes, employers of workplace pension schemes and advisers towards simple drawdown plans.
