Consumers have been gradually shifting back to annuities for a guaranteed income since the pension freedoms were introduced in April 2015, according to new data.
Figures from eValue’s quarterly pension freedoms index covering over 17,000 people showed that in October preference for guaranteed income rose to 47%, up from 33% in April.
Meanwhile preference for flexible income (i.e drawdown) dropped from 54% in April to 42% in October, just after the global market turbulence in late August and September.
The firm said this shows that market volatility has a big influence on the relative attractiveness to consumers of annuity and drawdown, driving the attractiveness of annuity to its highest point since the arrival of pension freedoms.
It predicts that if the current market uncertainty persists, there may be another peak in the popularity of annuities when freedom and choice reaches its first anniversary in April. The FTSE 100 has seen the equivalent of £140 billion wiped off it’s value since the start of 2016, approximately £50 billion was on the first trading day of the year.
The firm’s data comes from analysis of the 17,000 consumers who have used eValue’s online forecasting tools.
The news comes as research from the Pensions and Lifetimes Savings Association (PLSA) reveals that savers are not rushing to cash in their pots.
eValue strategy director Bruce Moss said: “Insight like this helps advisers and providers to anticipate when clients or potential clients will be engaged and looking for help and advice.
“The industry should use this intelligence to tailor its proposition to investors who are worried when markets are volatile, and should capitalise on consumer engagement each time there is a government announcement and pensions hits the headlines.”
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