Annuities are still proving to be a popular choice for retirees despite the introduction of new pension rules over a year ago, according to new research.
Financial technology firm eValue analysed data from its Pensions Freedom Planner tool and found demand for products that provide a guaranteed income in retirement has risen from 33% in April 2015 to 41% in April 2016.
During the same period, demand for flexible income options such as drawdown, fell from 54% to 46%.
Since April 2015, retirees aged 55 or over have been able to take advantage of new rules which give them complete freedom over their ‘pension pots’ and how they choose to generate an income in retirement.
However Bruce Moss, founder and director of eValue, said these latest figures conflict with early predictions that the rules would lead to the demise of annuities.
He also said retirees are more likely to opt for annuities in times of economic and political uncertainty.
‘In the run up to the referendum and if Brexit does happen, don’t be surprised to discover that annuities become the most popular option for retirees,’ he suggested.
‘The first year of pension freedom has shown once again the innate caution of the British. Predictions of the death of annuities have turned out to be wide of the mark as has the concern that retirees would cash out their pension funds and buy Lamborghinis’.
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