Pension investments exceeded £8bn in terms of inflows - including transfers - during the first quarter this year, up 4.4 per cent from the previous quarter.
Data from Equifax Touchstone revealed excluding transfers, inflows were £4.3bn, up 12.7 per cent on the fourth quarter.
The firm’s figures covers more than 90 per cent of the UK’s life and pensions companies, finding that money into annuities across the quarter dropped by £60.4m - 11.4 per cent - while flexible drawdown investments increased to £972m - 1.2 per cent on the previous quarter.
The largest inflows in the quarter came from individual stakeholder pensions, which grew 121.5 per cent to £60.9m.
During the first three months of the year, new premiums - excluding transfers - into self-invested personal pensions were up 12 per cent to 3.8bn, compared to the previous three months, and 28.2 per cent year-on-year.
Geoff Greensmith, director at Equifax Touchstone, said pension investments have seen significant growth in the first quarter of the year, despite ongoing stock market volatility.
“This is likely to have been spurred on at the time by concerns over fears of significant changes to tax relief in the March 2016 Budget, although this did not come to fruition.
“Following pension freedoms in 2015, it is unsurprising that we continue to see investors favouring flexible drawdown products over lifetime pension income; a trend that is likely to continue for the foreseeable future.”
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| Q1 2015 | Q4 2015 | Q1 2016 |
| Total pension investments (including transfers) | £6,216,072,066 | £7,667,539,190 | £8,002,271,743 |
| Total pension investments (excluding transfers) | £3,046,366,484 | £3,800,325,933 | £4,281,973,899 |
| Lifetime pension income (annuities) | £451,328,478 | £531,952,312 | £471,547,216 |
| Flexible drawdown (including Q1 2015 capped) | £596,582,690 | £960,644,545 | £972,256,563 |
| Individual stakeholder pensions | £61,583,634 | £27,484,591 | £60,868,051 |
| Personal Pensions and Sipps (excluding transfers) | £2,994,198,347 | £3,426,140,285 | £3,839,710,856 |
Source: Equifax Touchstone - figures are representative, as not all providers submitting data gave a breakdown between Sipp and flexible drawdown transfers
Ricky Chan, director and independent financial adviser at London-based IFS Wealth & Pensions, said the first quarter surge can be attributed to suggestions of a removal of tax relief at the time, better death benefits for generational planning, improved financial awareness of pensions via automatic enrolment, and increasing dividend taxation for small director firms.
He said: “It is clear that much of this new money has been pumped into personal pensions and Sipps, rather than individual stakeholder pensions; this could be because many individuals are looking for more investment flexibility to complement their new found pensions freedom when they decide to retire.”
ruth.gillbe@ft.com
