There has been “overwhelming support” for an initiative which seeks to offer members a pension uplift in exchange for their guaranteed annuity, according to Royal London.

The group said that out of 15,000 former Scottish Life policy holders, just over two thirds of people accepted the uplift, with the average pot holder receiving an additional £20,000, amounting to a total uplift of £466m.

The initiative was launched after it emerged that policy holders were “throwing away” guaranteed annuity rates in order to access pension freedoms. Policy holders will instead be offered an actuarially fair exchange in return for surrendering the guarantee.

Royal London director of policy, Steve Webb, said: “This has been a long and careful process designed to give members the option of exchanging their guaranteed annuity for an uplift in the value of their pension fund.

“Compared with a situation where a majority of policy holders are throwing away the value of their guarantees in order to access their pension fund, this is a much more satisfactory outcome, especially since those whose preference is to retain their guarantees have been able to opt to do so.”

The plan is open to former Scottish Life policyholders, of which there are around 30,000, and are also offered free guidance and subsidised financial advice for members.

The Financial Conduct Authority estimated that over half of savers are discarding their guaranteed rate, in favour of choosing to access their pension funds without taking an annuity.

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