When pension freedoms gave people the right to take the cash from their pension pot at age 55 and spend it in any way they like on 6 April three years ago, many foresaw the end of the traditional annuity market.
And indeed, Financial Conduct Authority (FCA) data has shown annuity sales slumped in the immediate aftermath of the reforms as drawdown sales spiked.
Hargreaves Lansdown said while about 90 per cent of people bought an annuity back in April 2015, now a mere 12 per cent are choosing an annuity, 34 per cent are remaining invested and drawing from their pension and 54 per cent are cashing in their whole pension.
Before pension freedom, annuity sales were running at about 350,000 a year, whereas today they stand at about 80,000 a year.
The shrinking demand for the products has sent ripples through the industry and so far eight providers have pulled out from the open market.
According to data from Hargreaves, only Canada Life; Aviva; Legal & General; Just; Scottish Widows; and Hodge Lifetime are currently offering annuities.
Reliance Mutual; Friends Life; Partnership Assurance; Prudential; Aegon; Standard Life; LV ; and Retirement Advantage have all left although some of these exits were the result of mergers, for instance Friends Life merged with Aviva, while Partnership Assurance merged with Just Retirement.
Despite this, Hargreaves estimates the remaining providers still have about 85 per cent of the original market share, meaning the most competitive players still dominate.
Competition has been adversely affected in terms of consumer choice as providers left the market, and far fewer people are buying annuities, but the companies they were mainly buying them from are still there to provide them in line with demand.
While demand for annuities suffered a blow in April 2014 when the freedoms where announced by then Chancellor George Osborne, annuity rates suffered a further knock after the Brexit vote in June 2016.
By July of that year the rates had already fallen on average 3.6 per cent, leaving a 65-year-old buying an annuity worse off at that time than a 60-year-old buying one six months before.
By mid-September the rates were down 27 per cent on the 12 months earlier, according to data from Hargreaves Lansdown, but by November of the following year they had crept back up 19 per cent overall.
Hargreaves found rates had behaved differently for different age groups.
