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Annuity sales fall by a third

The number of annuities sold fell by a third between the first and second quarters of 2014, according to figures published by the Association of British Insurers (ABI).

The figures reveal that 27,902 fewer annuities were sold in Q2 2014 than in Q1 2014 – a fall of 37.5%.

The total value of annuities sold fell from £2.5 billion in Q1 to £1.8 billion in Q2.

The statistics also show:

  • 55% of people who bought an annuity purchased from their existing insurer rather than from a different provider
  • more people with pots under £5,000 bought annuities from a different insurer
  • the number of enhanced annuities bought was unchanged from the previous quarter
  • the number of people buying income drawdown contracts increased by 35% on the quarter.

Yvonne Braun, head of savings, retirement and social care at the ABI, said:

“It [the data] suggests customers with smaller pots have immediately started to use the new freedoms to take their cash lump sum, which is something the industry has campaigned for.

“The data also shows where customers with small pots choose to annuitise they are increasingly taking enhanced annuities.

“Although it is too early to determine how customer behaviour will continue to evolve between now and when the Budget reforms come fully into effect in April 2015, there are still a significant number of savers who will want the regular income provided by an annuity.”

 

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