Pensions  

Pension investments hit record high: Equifax

Pension investments hit record high: Equifax

Data from Equifax Touchstone shows pension investments reached a record high in the second quarter of 2016, with £8.4bn of inflows, including transfers, an increase of 6.2 per cent - £0.5bn - on the previous quarter.

Self-invested personal pension sales are up by 7.9 per cent - £302.8m - compared to the first quarter and 14.3 per cent £517.7m year-on-year, whereas personal pensions are down 6.8 per cent on the first quarter.

The data covers more than 90 per cent of life and pensions companies in the UK.

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Additionally, new investments in individual stakeholder pensions plummeted by 28.6 per cent to just £35.6m, and the popularity of these products continues to wane as more employees become part of auto-enrolment.

The research also revealed annuity sales for the second quarter soared by 20 per cent - £93.1m.

Alongside this, flexible drawdown investments also increased, with new investments and transfers jumping to £1.1bn up 15 per cent - £145m - on the previous quarter and up 40.9 per cent - £324.5m year-on-year.

Across all pension products transfers were up 11 per cent to £407.5m on the previous quarter.

John Driscoll, director at Equifax Touchstone, said: “It is promising to see pension investments continue to grow strongly, despite market jitters in the run up to the UK referendum.

“There does however seem to be a stark divide in terms of investor types. Sipps, typically used by wealthier investors, are showing strong growth, while investments into personal and individual stakeholder plans fell.

“Auto-enrolment is making very positive steps to get more of the UK population saving but the industry still has a lot of work to do to encourage people to use retirement products and make the most of the tax advantages they offer.

“The choice of products available and the new pension rules can be confusing for consumers to navigate, and advisers have a valuable role in supporting their clients through the maze.”

 Pension type

Q1 2016

Q2 2016

Total pension investments (including transfers)

£7,878,087,260

£8,367,373,547

Total pension investments (excluding transfers)

£4,162,859,898

£4,244,646,574

Flexible drawdown (single premium)

£388,282,843

£459,999,996

Flexible drawdown (transfer)

£583,973,720

£657,274,843

Individual stakeholder pensions (single premium)

£49,896,293

£35,621,410

Individual stakeholder pensions (transfer)

£6,887,851

£4,751,777

Lifetime pension income (annuities)

£466,476,734

£559,615,648

Pension Trans.1

£986,412,509

£1,056,533,204

Personal (single premium)

£1,557,348,289

£1,451,978,326

SIPP (single premium)

£2,167,332,473

£2,297,046,842

SIPP (transfer)

£1,671,476,548

£1,844,551,501


Source: Equifax

Dan Clayden, director at Buckfastleigh-based Clayden Associates, said: “The increase in annuities may be a bit of a surprise but then I am not sure if that increase was just compared to the previous quarter.

“It doesn’t actually show what they have done compared to the previous year. Annuity sales have fallen - I wouldn’t be surprised if you see quarter three go down because annuities would have been hit by the Bank of England’s decision to reduce interest rates.”

ruth.gillbe@ft.com