Sales of enhanced annuities have plunged in the first three months of 2016, according to data from consultancy Willis Towers Watson.
Q1 figures show sales of £254.2m, down from £357.4m in Q4 2015 and £290.8m in Q3 2015.
However, new unit-linked guarantee premiums has risen over the same period. The value of premiums rose 17 per cent in Q1 2016 to £189.4m, up from £161.5m in the last quarter of 2015.
Willis Towers Watson director Jeremy Nurse says: “In contrast to the steep declines recorded in 2014, which directly followed George Osborne’s March 2014 Budget announcement on new pension freedoms, the last three sets of quarterly results provide a broader picture that suggests the rate of decline may now be slowing and some stability returning to the annuities market.”
He adds: “The new pension flexibilities introduced in April 2015 had a major impact on the market for enhanced annuities, but these pension freedoms are now settling in and working as intended.”