Sales of annuities fell by 16% to 33,567 in the six months to April, compared with a year earlier. This compares to 83,687 new drawdown policies.

Despite fears on the impact of allowing people more flexibility in their pension arrangements, there are no signs of people being reckless with their pension pots. Although full cash withdrawals remain an option, the vast majority are done by those with small (sub-£30,000) pension pots.  The data shows around 151,000 pots were taken entirely in cash over the period, 8% down on the previous six months.

Equally, most retirees (57%) stick with their existing drawdown provider, even though they can switch at any time.

Tom Selby, senior analyst at AJ Bell, said:“We are now getting a clearer picture of how savers are using the pension freedoms. Annuity sales have continued to slump in an environment of persistently low interest rates, while drawdown has soared as more people take advantage of the flexibility on offer.

“While some have flagged concerns about a lack of switching in drawdown, we need to bear in mind that investors are able to change provider at any time whereas buying an annuity is a one-and-done decision.

“The evidence to date points to people broadly using the freedoms sensibly, although the data does not include other income sources people have in addition to their pension savings. Without this information it is difficult to truly judge the success or otherwise of the reforms to date.”