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Fewer savers using advisers before cashing out pension

Annuity-Arrow-700x450.jpgFewer savers are turning to an adviser before fully cashing out their pension, latest FCA figures show.

Between April and September 2017, just 32 per cent of full withdrawals were advised, down from 44 per cent the previous year.

Nearly all (95 per cent) of the decline in advice was attributed to cash outs for pots under £30,000.

Annuity sales to existing customers also fell another seven per cent last year.

Market data the FCA collected between April and September 2017 shows just 53 per cent of total annuity purchases, approximately 19,000 plans, were made by existing customers, a 7 per cent decrease on the same period last year.

However, the proportion of annuity sales made to new customers or in single and multi-firm third party arrangements saw a 7 per cent increase to 47 per cent.

The annuity market in 2018 is likely to look vastly different to that before pension freedoms, with advisers paying significantly less attention to annuities compared to three years ago.

The majority of the fall in annuity sales in the regulator’s data is for pot sizes under £50,000.

Drawdown pulls further away from annuities as non-advised sales grow

Phoenix Group announced in November it would allow customers to cash out a lump sump from their annuity and exit their accompanying policy over concerns of the cost of administrating small pots.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. None of this is surprising. Fewer savers using advisers – this is because the stupid don’t want to be told. Our whole culture is ‘spend now’ – that’s why we are world champion debtors.

    “advisers paying significantly less attention to annuities”. No kidding. Could it possibly have anything to do with the fact that an annuity usually pays just 1% and then it’s over. Drawdown on the other hand attracts fees for years – both to the adviser, fund mangers and platforms.

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