Investors piled into Isas and self-invested personal pensions last year as the lockdowns led to a surplus of savings.
Some 769,000 Isas were bought in 2021, compared to 390,000 in 2020, according to data from the FCA, published yesterday (June 28).
This included 296,000 in the first three months of 2021 alone.
During the peak of the pandemic, millions of "accidental savers" appeared, said Tom Selby, head of retirement policy at AJ Bell.
“[Those] fortunate enough to remain in employment saw their bank balances bolstered as spending on things like going out and holidays plummeted," he added.
Sipp and Isa sales 2020-2021
Source: AJ Bell analysis of FCA data
However, data from the Bank of England released earlier this year shows that investors have also been pulling cash from these products, with withdrawals totalling £4.5bn last year.
Some £574mn was withdrawn from cash Isas in December, according to the Bank of England.
Takeup of cash Isas fell year-on-year in the 2020-21 tax year, with a drop of 1mn subscriptions according to HMRC.
The number of cash Isas offered on the market has also dropped, falling in February 379, from 388 in January, according to Moneyfacts’ latest UK savings trends treasury report.
Sipp sales rose 15 per cent in 2021, increasing from 740,000 in 2020 to 852,000 the year after.
The number of people entering drawdown rose 21 per cent, which Selby said reflects a “return to confidence” among savers taking a retirement income while staying invested in markets.
“That confidence faces an arguably even sterner test at the moment, with economies around the world struggling to combat rapidly rising prices and the continuing uncertainty caused by Russia’s war in Ukraine.”
Annuity sales nudged up 7 per cent to 44,000 in 2021, though sales remain lower than in previous years.
Selby said rising interest rates could help make a guaranteed income for life more attractive, though the inflexibility of the products might put some savers off.
“For lots of people a combination of annuity and drawdown will likely be the right solution," he said.
"For example, annuities tend to become better value as we get older, while some will adopt a mix-and-match approach, using an annuity to cover fixed costs and opting for flexibility with the rest.”