Long-term savings and pension providers are paying out a staggering £74.7m to customers every day, the Association of British Insurers has revealed.

Published today, Key Facts 2016 revealed that, in total, UK insurers are paying out the equivalent of £131.4m every day. Of the money paid out to pension and lifetime savings customers, £38m is paid in annuity payments and £36.7m is paid in investment and savings policies.

The report noted that in 2015 £14bn was paid out to 6.2 million annuities, but, the number of annuity sales has fallen by more than half from 189,000 with a value of £7bn in 2014, to 82,000 with a value of £4.2bn in 2015. Of those that purchased an annuity, 58.5 per cent bought from an existing provider.

The report highlights that in the first year since the freedom and choice pension reforms were introduced in April 2015, £8.2bn was withdrawn from pension pots: £4.3bn in lump sums and £3.9bn in payments from income drawdown.

In addition, it found that over 15.1 million people contributed to a workplace pension in 2015, an increase of 9 per cent on 2014. There were 19.1 million individual pension policies in force.

In terms of long-term savings products, the ABI said they tend to be taken with advice. Three-quarters of customers had some form of advice when buying a pension, protection or other long-term insurance product.

Commenting on the report, ABI director general Huw Evans said: “If insurance did not exist the world would be a much more perilous place. From helping people and businesses cope with unexpected events, to encouraging people to save for retirement, the insurance and long-term savings industry provides financial security for millions of families and businesses.

“The industry reflects the society it serves, and is constantly innovating to meet changing customer needs. However, we must do more to improve customer trust in the industry and ensure that customers have confidence that, if the worst happens, then their claim will be paid,” he said.

“As the largest insurance market in Europe and fourth largest in the world, the UK industry makes a vital contribution to the economy. As we approach our departure from the EU, we must ensure our world-leading insurance and long-term savings industry is regulated appropriately, with effective trading routes into the EU and wider world, a competitive environment and continued access to the best talent.”

Share Story: