Advisers have said that the revival in popularity in annuities following their post-pension freedoms fall has not come as a surprise (Pension Adviser).
Data from the Association of British Insurers (ABI) revealed that 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 a par with drawdown sales with drawdown sales since the reforms came into effect, ABI data has found. It also revealed that 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 835,000 income drawdown payments, with an average payment of £3,500. According to the ABI, smaller pots were generally being taken as lump sums, while larger pots were still being used to access a regular retirement income, with an average fund invested of £59,600.
The data also suggested that the amount of cash lump-sum withdrawals was decreasing, as demand settled following reforms. Jon French, an IFA, agreed that the longer guarantees had made a difference to sales.
“It does not surprise me that there is a surge back in annuity purchases, and this is partly because product providers advertising has been a bit more poignant or clearly marketed.
“They used to offer only 10-year death benefits and this has gone up to 30 years you are almost guaranteed to get your money back”.
(FTAdviser, Simon Webster)
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