Drawdown and lump sums are being favoured by pension savers a month after the introduction of the radical new freedoms, figures from Hargreaves Lansdown show.
Less than one in ten (8.4 per cent) of Hargreaves’ customers have bought an annuity since 6 April, compared to 75 per cent who entered drawdown and 16.6 per cent who used the new UFPLS withdrawal option.
But the firm says people using its online retirement planner indicate they want to secure a guaranteed income, suggesting “annuities may yet make a comeback”.
A separate survey of 11,000 over-55-year-olds who are not Hargreaves’ customers found over one in three (34.22 per cent) plan to take money out in the next year, with only 41 per cent saying they would not be touching their pot.
Of those planning to make a withdrawal, 11.79 per cent want to take it all in one go and 19.9 per cent will just take the tax-free cash.
The most popular item to spend pension cash on was living expenses (29.36 per cent), followed by reinvesting in Isas (23.05 per cent) and holidays (18.66 per cent).
Hargreaves Lansdown head of pension research Tom McPhail says: “Looking at investors’ spending intentions, it appears that investors are gravitating towards more considered choices as time has gone on.
“Aside from understandable short term indulgences such as cars and holidays, there is a marked increase in intentions to spend on general living expenses – what pensions were always intended for – and reinvestment in Isas or paying off a mortgage. By contrast, investing in property seems to have fallen away.”