Annuity demand is showing signs of stabilising with uptake growing by 14% in September, compared to June, according to a new report from financial services software supplier Iress.
Demand, however, is still subdued following the impact of the pension changes announced in the Budget, the firm said, noting that annuity sales were down by 47.1% on an annual basis.
Dave Miller, executive general manger of Iress's sourcing team, said: 'The Budget changes knocked the wind from the sails of annuity demand, but the slight recovery in the last quarter suggests the market may have bottomed out in the short term.
'April 2015 will provide a pivotal moment for demand when guidance becomes available. At this point, we should also see variety in both annuities and investment backed products. As people incorporate multiple and flexible products in their retirement, we believe guaranteed income will remain an important strut in long-term retirement planning.'
In addition, average incomes for annuitants have increased, the firm said. The average single life annuity secured an income of £3,810 per year in September, up 4.6% compared to August.
The increase in income has been driven by a growth in the average pension pot size, which is at its highest level since April 2012, hitting £72,134 in September.
In contrast, standard annuity rates fell to their lowest since July 2013. In September, they decreased to 5.28%, marginally down from August when they were at 5.29%.