Less than one in 10 (8%) of staff have opted to purchase an annuity following the introduction of the pension freedoms that were introduced in April, according to research by Hargreaves Lansdown.
Its analysis of the behaviour of 12,000 employees also found that three-quarters (75%) of respondents chose to drawdown income from their pension pot.
The research also found:
- 17% of respondents opted to take uncrystallised funds pension lump sums (UFPLS).
- 60% of respondents allocated cash to pay a flexible income of £249 per month or less.
- 44% selected a secure income of between £250 per month and £1,499 per month.
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In addition,a separate survey by Hargreaves Lansdown, which surveyed 11,000 employees, found:
- 34% of respondents plan to take out some of their pension pot, and 12% plan to take all their money in one go. Around a fifth plan to take just the tax-free cash (20%).
- 25% were unsure as to what they would do with their pension.
- 41% said they definitely would not be taking money from their pension in the next year.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said: “We’re seeing high levels of engagement and very positive feedback from investors.
“The pension freedoms are working well, however we don’t think that transactions have yet settled down into a ‘normal’ pattern.
“The current high levels of drawdown and UFPLS transactions are likely to still the pent-up demand held over from 2014/15.
“We see evidence that demand for annuities may grow again over time as investors are looking for higher levels of secure income than flexible withdrawals. We’re also interested to see that death benefits are now being cited as a reason not to withdraw money from a pension.”