Pension freedoms result in £4.7bn paid out in first 6 months

ABI data released today shows that £4.7bn has been withdrawn under the new pension freedoms but surprisingly annuity sales have risen for the first time in three years. The ABI, which announced the figures at its biennial conference today, said that despite the large withdrawals since the freedoms arrived in April overall people were taking a “common sense approach” when making decisions for their retirement.Smaller pots were generally being taken as cash, while larger pots were still being used to access retirement income, with £5bn invested to buy nearly 84,500 regular income products, either annuities or income drawdown products.{desktop}{/desktop}{mobile}{/mobile}Annuity sales have seen their first quarter on quarter increase for the last three years with 22,380 sold, worth £1.17bn in the third quarter of this year compared to 18,200, worth £990m last quarter. The last time there was a quarter on quarter increase was Q2-Q3 2012.The figures show, for pay outs:· £2.5bn has been paid out in 166,700 cash lump sum payments, with an average payment of just under £15,000.· £2.2bn has been paid out via 606,000 income drawdown payments, with an average payment of £3,600.For funds being invested:· £2.85bn has been invested in 43,800 income drawdown products, an average fund of almost £65,000.· £2.17bn has been invested in around 40,600 annuities, making the average fund invested nearly £53,300.ABI data also shows that people are shopping around to find the best deal with 60% of people changing provider when buying an income drawdown policy. This compares to 40% of customers who bought an annuity, where customers were often offered guaranteed annuity rates by their existing provider.ABI chairman Paul Evans said: “We’ve responded exceptionally well to the new Retirement Freedoms. As expected, customers are taking smaller pots as cash and using larger pots to secure an income – about 40% with an annuity and 60% with a flexible income drawdown product.“Around half are now switching away from the company they saved with to secure the best deal for their retirement income. Overall, customers appear to be behaving rationally and I think we can all be proud of the speed with which we responded to help the Government's reforms succeed.”The ABI’s director for Long Terms Savings Policy, Dr Yvonne Braun, said: "The peaceful pension revolution continues. While providers continue to meet high levels of demand, it’s clear that people are taking a sensible approach and considering how they will pay for their retirement.”{desktop}{/desktop}{mobile}{/mobile}“Despite some ringing the death knell for annuities, this seems to have been premature. An increasing number of people are recognising the value of a guaranteed income, with annuity sales rising this quarter.”Quarterly annuity sales

Pension freedoms result in £4.7bn paid out in first 6 months

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