Despite the sweeping changes to pension rules introduced last year most British millennials intend to include annuities in their retirement strategies, while older savers plan to avoid annuities, according to a survey by Legg Mason Global Asset Management.
In total, 84% of UK millennials said they are ‘highly likely’ to consider using an annuity despite being under no obligation to do so. While 72% of the investors aged 40 or over said they do not intend to buy one.
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The survey reveals that millennials with large pools of assets (those with at least $1m of investable assets) are even more enthusiastic. 92% of the respondents in this category said they are ‘highly likely’ to buy one.
Legg Mason head of UK sales Adam Gent said: "Last year’s effective removal of the need to buy an annuity has had a huge impact on sales and our research suggests the market is unlikely to stage a significant recovery anytime soon.
"However, it is fascinating to find that younger investors, particularly those with larger pools of investable assets, are far more interested in using an annuity as part of their overall retirement strategies. That would imply that, while providers are likely to continue to struggle with the fallout of the pension freedoms in the short term, annuities could still have a big part to play in the UK retirement market in the coming years."
Pensions freedoms – announced in April 2014 and implemented a year later in April 2015 – sparked a huge fall in annuity sales as those aged 55 or over were exempted from having to purchase one at retirement.
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By GlobalData
