Association of British Insurers data published today (3 November) shows £4.7bn has been withdrawn under the new pension freedoms since April.
The ABI found smaller pots are generally being taken as cash, while larger pots are still being used to access retirement income, with £5bn invested to buy nearly 84,500 regular income products, either annuities or income drawdown products.
Annuity sales have seen their first quarter on quarter increase for the last three years, with 22,380 sold, worth £1.17bn in the third quarter of this year compared to 18,200, worth £990m last quarter.
The last time there was a quarter on quarter increase was the second and third quarter of 2012.
The figures show, for pay outs £2.5bn has been paid out in 166,700 cash lump sum payments, with an average payment of just under £15,000 and £2.2bn has been paid out via 606,000 income drawdown payments, with an average payment of £3,600.
For funds being invested £2.85bn has been invested in 43,800 income drawdown products, with an average fund of almost £65,000.
About £2.17bn has been invested in around 40,600 annuities, making the average fund invested nearly £53,300.
The ABI’s data also shows that people are shopping around to find the best deal with 60 per cent of people changing provider when buying an income drawdown policy.
This compares to 40 per cent of customers who bought an annuity, where customers are often offered guaranteed annuity rates by their existing provider.
ABI chairman Paul Evans said: “We’ve responded exceptionally well to the new retirement freedoms.
The ABI’s director for long terms savings policy, Dr Yvonne Braun, said: “The peaceful pension revolution continues. While providers continue to meet high levels of demand, it’s clear that people are taking a sensible approach and considering how they will pay for their retirement.
“Despite some ringing the death knell for annuities, this seems to have been premature. An increasing number of people are recognising the value of a guaranteed income, with annuity sales rising this quarter.
“There are also initial signs that the number of people accessing their pension pot as cash is beginning to settle down, with larger pots continuing to be used to buy retirement income products.
“However, the figures also show that ensuring people save enough for retirement remains our key challenge. With life expectancy increasing and final salary pension provision declining, we must now turn our attention to helping customers grow bigger pots.”
The ABI’s statistics came after data from Fidelity’s call centres showed that the biggest theme for October was drawdown, with 21 per cent of calls, up from 15 per cent in September.
Those seeking to get hold of tax free cash fell from 24 per cent in September to 18 per cent last month; representing the first time that drawdown has overtaken tax free cash requests since pension freedoms began in April.
Other key themes related to the best use of defined benefit pension pots - up to 12 per cent from 6 per cent month-on-month - while shopping around for self-invested personal pensions remained fairly stable from September to October at 15 per cent and 13 per cent respectively.
emma.hughes@ft.com
