Those searching for a guaranteed income in retirement are choosing annuities as opposed to drawdown-annuity products, new figures suggest.
During the first year of pension freedoms being available to individuals, software firm Selectapension found that 33% of savers had chosen a guaranteed income. However, of this percentage, only 1.98% selected guaranteed drawdown products, whilst 98.02% chose traditional annuities.
Meanwhile, figures released earlier in the year by the Financial Conduct Authority (FCA) revealed that the number of savers choosing to take their pension pot savings as cash decreased at the end of 2015.
65,610 individuals withdrew cash from their pension pot between the months of October and December, representing a fall of 42% from the previous quarter, when a total of 113,100 savers made full cash withdrawals from their savings.
The FCA’s data also revealed that, during the same period, 127,094 pension pots were accessed for the first time, either taken entirely in cash or partially drawn down as an income. This number is down from a figure of 197,443 during the previous quarter, constituting a 36% decrease.
Additionally, the figures suggested that those aged between 55 and 59 had the highest rate of withdrawals as a percentage of their pension pot, with 11% of savers in this age group taking an income of 10% or more from their savings.
New rules provide savers aged 55 and over with full access to their pension pot. These rules permit individuals to cash in up to 25% of their savings as a tax-free lump sum.