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Annuity sales down 16% as thousands defer retirement income choice – ABI

Jenna Towler
Written By:
Jenna Towler

Some 353,000 annuities worth just under a total of £12bn were sold by Association of British Insurers (ABI) members in 2013, latest figures show.

The body said this was 16% down on the previous year and its members were reporting an increase in the number of customers deferring the decision on how to take income in retirement.

However, the number of contracts sold on the open market continued to rise. Some 48% of sales were external – meaning customers moved from their original provider – in 2012 and 2013. This compared to 31% in 2003 and 45% in 2011.

The proportion of enhanced – medically underwritten – annuities also continued to increase. It stood at 28% in the fourth quarter of last year. The ABI also said more people with the smallest pots were now buying enhanced annuities.

ABI statistics on the annuity market found the average (mean) annuity in 2013 was bought with a pension fund of around £35,600; but the median was about £20,000, so half of people buy an annuity with less than this amount.

Among ABI members, 7% of annuities sold were investment-linked and there are about 21,000 new drawdown customers every year.

The Financial Conduct Authority released a damning report on the state of the ‘disorderly’ annuity market last week

It said its thematic review would now investigate how things can be improved for consumers.