Hargreaves Lansdown has seen a 41 per cent fall in annuity business post-budget, while drawdown business has increased by 29 per cent. The figures compare business transacted in June 2013 with that done in June 2014.
Prior to the budget, annuity sales across the UK market were running at around 30,000 a month. With an average purchase price of £21,000 and given that sales have nearly halved in the 5 months since the budget, the investment and advisory group estimates there is currently around £1.5bn of retirement money across UK market currently in limbo, with many pension providers still unable to offer members or policyholders a drawdown alternative.
Recent research by Hargreaves Lansdown found 80 per cent of prospective annuity purchasers who had chosen to delay, were doing so because they were waiting for more details to emerge.
Hargreaves head of pensions research Tom McPhail says: “In the long term we think the demise of the annuity market has been overstated as many people will still want to buy some secure income. Some investors have been happy to defer drawing on their retirement funds while they wait to see what options emerge.”