Annuity sales are continuing to fall, while demand for drawdown products remain buoyant, according to industry data on the retirement market.
Figures for the third quarter issued by the Association of British Insurers showed that the number of drawdown contracts sold by ABI members more than doubled compared to the same period in 2013. The value of drawdown contracts is now around 50% of the value of annuity sales, compared to just 14% a year ago.
Meanwhile, the number of annuities sold fell by 14% on the last quarter and by 56% when compared with the same three months in 2013. The ABI noted that the number of annuities sold had fallen further than the value of annuities sold, suggested people with smaller pension pots were either deferring or taking cash, following government announcements on reforms.
Commenting on the figures, Rob Yuille, policy advisor at the ABI, said: 'Pension flexibility continues to have an impact on customer behaviour in the retirement market, and it is clear that there are many people waiting to make a decision about what to do with their pension.
'We are seeking to explore beyond the statistics with members to identify and explain the trends in customer behaviour in this transitional year.'
Tom McPhail, head of pensions research at Hargreaves Lansdown, said the increased demand for drawdown was likely to continue after next April, when the new pension flexibilities come in.
But he added: 'It is also notable that drawdown sales have not picked up all the slack from the drop off of the annuity market. There appears to be a building population of investors waiting until after April, something borne out by previous research from Hargreaves Lansdown.
'This reinforces the expectation that we may see very substantial volumes of demand in the weeks and months after the 6 April 2015. We do have concerns that some pension providers may not be ready to meet their members' and policyholders' expectations.'