New figures released by the Financial Conduct Authority (FCA) show that the level of income drawdown products purchased in the UK has jumped by a significant 46 per cent since the implementation of the new pension freedoms earlier this year.
The FCA collated data from a variety of different providers in order to publish a detailed overview of the current retail investment vehicle climate in the UK.
New Pension Freedoms
The figures demonstrate that in Q1 2015, there were income drawdown product sales to the tune of 22,741. This figure increased to 33,218 during Q2. This quarter is particularly significant because it encompasses April, May and June, and the new pension freedoms went live in April.
The report also points to an 18 per cent decrease in annuity sales between Q1 and Q2 this year, dropping from a high of 16,100 to 13,123. In Q4 2014, a total of 21,267 annuities were shifted. This is 38 per cent higher than the number sold in Q2 2015. These figures are likely to have been gathered using back office systems for IFAs.
The number of people acting on annuity and drawdown sales under advice (30,312 sold) as opposed to non-advice (16,029 sold) nearly doubled, according to the data.
Turning to personal pensions, the figures show that there were a total of 168,223 advised sales, which compares to 270,936 transactions that proceeded without advice.
A marginal increase in Sipp sales was observed following the pension freedoms. They went up to 146,567 from 146,430.
Conversely, there was a small but notable decrease in the sales of ISAs, which went down to 60,884 from 65,436.
The level of ISA provisions and new pensions dealt with by financial advisers, often via back office systems for IFAs, went up 53 per cent from a figure of 33,821 in Q1 to 51,840 in Q2.
Building Societies and Banks
This is a larger rise than new business written by building societies and banks, which went up to 22,546 from 20,918 over the same period. This type of data can be gathered using software such as that available on the Intelliflo website.
Life Insurance Policies
There was also an increase in new policies provided by life insurance companies, which went up to 119,158 in Q2 from 90,731 in Q1.