National advice firm LEBC has posted a 17.3 per cent increase in annuity sales since the pension freedoms, countering the trend of declining sales found elsewhere in the market.
The number of LEBC customers taking up the annuity option in the three years prior to 2015, when the pension freedoms were introduced, was 453, which compares with 531 in the three year-period since.
The total purchase price has also grown from £34,349,000 to £57,384,000, the firm stated, with an average purchase price of £75,825 in the three years prior to pension freedoms and £108,067 since their introduction.
But other advice firms FTAdviser spoke to reported a drop in sales in favour of drawdown solutions.
The pension freedom reforms gave savers the flexibility to access their pension pots in any way they like, with the possibility of cashing them in or entering into drawdown.
Recent figures from the Financial Conduct Authority's (FCA) retirement outcomes review showed a substantial shift away from annuities, with twice as many pension pots being used for drawdown than to buy an annuity.
Kay Ingram, director of public policy at LEBC, told FTAdviser that 30 per cent of LEBC’s clients who transfer from a defined benefit (DB) scheme and require an immediate income are typically recommended an annuity.
The remaining 70 per cent opt for drawdown, with the number of cases doubling since the introduction of pension freedoms.
She also said annuities that offer cashback on death (where this has not been received in instalments of income) have proved popular among LEBC's consumers because they allowed them to leave a lump sum to loved ones as well as securing an income.
Ms Ingram explained typically two-thirds of clients, who buy an annuity, qualify for enhanced terms due to medical or lifestyle issues.
She said: "We believe this high percentage is due to our thorough fact finding process and regular contact with underwriters to find out what factors they will take into account."
Other financial advice firms contacted by FTAdviser did not want to disclosed details of their annuities sales.
A spokesperson for St James’s Place (SJP) said the firm has seen a fall in the number of clients opting to buy an annuity since the pension freedoms were introduced.
She said: "This is perhaps unsurprising given the wide range of options now available to people as they reach retirement age."
Jade Connolly, strategy and acquisitions manager at Ascot Lloyd, said annuities were still relevant for clients with a need for a basic level of fixed income, and those in poor health.
However, many customers presented with annuity income figures felt they could secure a more flexible income through a drawdown contract, she said.
She said: "Annuity rates are still at a level which makes the income unattractive. For many of our clients, a basic level of income is already secured through state and private pensions.
"Therefore, for many clients, preserving the value of their estate from an inheritance perspective is important and other assets are often used to provide an income before the pension is accessed."
