A year on from the introduction of pension freedoms in 2015, the demand for cashing in pensions pots has begun “settling down” according to data from the Association of British Insurers (ABI).
Annuities have seen a rise in popularity while the number of outstripped income drawdown products rose in the last quarter to 21,200 – worth £1.1 billion.
The ABI’s latest data shows that since April 2015:
- £3 billion was paid out in 213,000 cash lump sum payments, with an average payment of £14,800
- £2.9 billion was paid out in 835,900 income drawdown payments, with an average of £3,500
- £4.2 billion was invested in 63,600 income drawdown products, with an average fund of £66,000
- £3.3 billion was invested in 61,700 annuities, with the average fund of £53,000.
Dr Yvonne Braun, director of policy for long term savings and protection at ABI, said:
“Following some initial pent up demand, the number of people accessing their pension pot as cash in one go has settled down. People are taking a sensible approach and considering how they will pay for their whole retirement.
“Our key challenge remains ensuring people save enough for their retirement. With increasing life expectancy and declining final salary pension provision, we must turn our attention to helping customers grow bigger pots.”