Pension annuity sales plummet by more than third

http://www.theguardian.com/money/2014/sep/11/pension-annuity-sales-plummet-more-than-third

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Sales of pension annuities have fallen by more than a third following George Osborne's surprise budget decision to let older workers do as they please with their retirement savings from next year.

The Association of British Insurers said 46,368 annuities were sold during the three months to the end of June, compared with 74,270 during the previous three months – a fall of 37.5% in the space of a few weeks.

The figures prompted a warning from leading industry player Hargreaves Lansdown that large numbers of people putting off a decision while they waited for more information about their options could result in a "tidal wave" of activity next spring that may leave some pension providers struggling to cope.

The chancellor announced in March that he was scrapping rules that in effect forced many people to use their retirement pot to buy an annuity, which provides a regular income from the money a pension plan holder has built up during their working life.

Osborne's new regime comes into force in April and will affect the 320,000 people who retire each year with defined contribution pensions. The pensions minister Steve Webb declared that savers should be free to buy a Lamborghini sportscar if they wish.

Figures published this week showed that annuity rates had their biggest monthly fall in three years during August. Moneyfacts, a financial data provider, said the average annual income from a level no-guarantee annuity for a 65-year-old, based on a £50,000 pension pot, fell by 2.6% last month. Over a 20-year retirement this equates to £1,540 less in income.