Pensions  

ABI data reveals annuity revival post-freedoms

ABI data reveals annuity revival post-freedoms

Annuities are beginning to see a revival in popularity following their post-pension freedom fall, data from the Association of British Insurers has revealed.

Across the fourth quarter of last year, 21,200 annuities were sold - worth £1.1bn - compared with 19,700 drawdown policies - worth £1.4bn.

Annuity sales are now almost on par with drawdown sales since the reforms came into effect, the ABI data found.

Article continues after advert

Overall, since April 2015, £3bn has been paid out in 213,000 cash lump sum payments, with an average payment of £14,800.

A total of £2.9bn has been paid out via 835,900 income drawdown payments, with an average payment of £3,500.

For funds invested in new products since the reforms came in, £4.2bn has been invested in 63,600 income drawdown products, with an average fund of £66,000.

In total, £3.3bn has been invested in around 61,700 annuities, making the average fund invested nearly £53,000.

According to the ABI, smaller pots are generally being taken as lump sums, while larger pots are still being used to access a regular retirement income, with an average fund invested of £59,600.

Additionally, almost £7.5bn has been invested to buy nearly 125,500 regular income products; either annuities or income drawdown products.

Another key trend is people tending to use drawdown as a regular income product, with 65 per cent withdrawn in the fourth quarter being worth £1,000 or less.

The data also suggested that the amount of cash lump sum withdrawals is decreasing, as demand settles following the reforms.

Only £660m was withdrawn in cash in the fourth quarter, compared to £1.3bn and £1.2bn in the second and third quarters respectively. Over half 55 per cent of cash withdrawals were less than £10,000.

ABI Pension Freedoms Data  Q2 2015 Q3 2015Q4 2015Total-  nine months since reforms 
Cash withdrawals £1.3bn paid out in cash lump sums, an average payment size of just under £15,000.£1.2bn paid out in cash lump sums, with an average payment size of just over £15,000.£660m paid out in cash lump sums, with average payment of just over £14,000.  £3bn paid out in just over 213,000 cash lump sum payments, an average payment of nearly £15,000.
Drawdown withdrawals£1.2bn paid out via 282,000 income drawdown payments, an average payment of nearly £4,200.£970m paid out via 324,000 income drawdown payments, an average payment of nearly £3,000.£730m paid out via 230,000 income drawdown payments, an average payment of nearly £3,200£2.9bn paid out via 836,000 income drawdown payments, an average payment of £3,500.
 Annuity sales£990m invested in around 18,200 annuities, making the average fund invested just over £54,500.£1.17bn invested in around 22,380 annuities, making the average fund invested just over £52,300.£1.1bn invested in around 21,200 annuities making the average fund invested nearly £51,900£3.3bn invested in around 61,700 annuities, making the average fund invested nearly £53,000.
Drawdown sales£1.3bn invested in 18,800 income drawdown products, an average fund size of almost £69,000.£1.55bn invested in 25,100 income drawdown products, an average fund size of almost £61,900.£1.35bn invested in 19,700 income drawdown products, an average fund size of almost £68,500.£4.2bn invested in 63,600 income drawdown products, an average fund of just over £66,000.