Savers have invested more in regular income products than just taking cash since the pension freedoms came into force in April.
That’s according to the Association of British Insurers (ABI).
The ABI have stated that during April, May and June of this year, around £1.3bn was extracted in cash lump sums, with an average payment size of just under £15,000, whereas £2.3bn has been used to buy income products, of which £1.3bn was put into income drawdown, surpassing £990m invested in annuities.
The average pot size for drawdown was £68k and for annuities just over £55.6k.
Around £1.1bn has been paid to customers via 264,000 income drawdown payments, with an average payment of nearly £4,200. A total of £2.5bn has been paid out to savers, which is equivalent to £27m per day.
The Director for long terms savings policy, Dr Yvonne Braun, said the figures indicate “how well” pension providers have adapted to the new pension freedoms – and also how popular the reforms have so far proved to be among savers.
She went on: “Working out how we pay for our growing life expectancy is a vital issue for the UK.
“The pension freedoms should be able to play an important role in helping retirees shape their income to suit their financial needs over the rest of their lives.
“However, people will only be able to benefit fully if they have been able to build up enough in savings during their working lives.
“Creating a stronger savings culture is therefore crucial.”
The full figures from the ABI:
Amount paid to customers in three months since April:
• £1.3bn has been paid out in cash lump sums, with an average payment size of just under £15,000.
• £1.1bn has been paid out via 264,000 income drawdown payments, an average payment of nearly £4,200.
Funds invested in regular income products:
• £1.3bn has been invested in 19,600 income drawdown products, an average fund size of almost £68,000.
• £990m has been invested in around 17,800 annuities, making the average fund invested just over £55,600.
• 45% of customers buying an annuity changed provider. For income drawdown purchases, this figure is 55%.