The Association of British Insurers is scheduled to publish full annuity sales figures for last year later this week, but sales for the first three quarters were down 56 per cent. Standard Life announced last week that its annuity sales were down 66 per cent last year.

Tower Watson’s research suggests sales of every type of annuity have suffered since the pension reforms were outlined by Osborne last April. Variable annuities, which offer an income linked to the stock market were the least affected annuity product in percentage terms, with sales last year falling 22 per cent from the year before. However, variable annuities comprise a small portion of the annuity market overall.

Enhanced annuities (products that pay higher annual incomes to those with shorter life expectancies) suffered notably; sales of enhanced annuities were 65 per cent lower in Q4 last year compared to the same period the year prior. It appears that those in ill-health are planning to withdraw their pension fund as a lump sum when the time comes.

Jeremy Nurse, one of Tower Watson’s directors, believed this fall to be “inevitable”, given that many retirees are now “anticipating greater freedom about how they use their pension.”

Nurse also pointed to “declining gilt yields over the second half of last year” putting continual downward pressure on annuity rates as another key disincentive.

“If I was in ill health, I wouldn’t want an annuity,” acknowledged Laith Khalaf, senior analyst Hargreaves Lansdown. “The ideal situation for someone buying an annuity is a long life expectancy. Lots of people who do not have this will be thinking I’d rather have the money to enjoy now.”