U.K. employers expect only 40% on average of their employees to buy an annuity to fund their retirement once the government's new rules over defined contribution plans come into effect, beginning in April 2015, a Towers Watson survey found.
In his 2014 budget address in March, U.K. Chancellor of the Exchequer George Osborne announced that DC participants would no longer be required to buy an annuity to fund their retirement, giving them complete freedom with their retirement savings.
One-third of the 92 U.K. employers surveyed by Towers Watson said that fewer than 25% of their employees would buy an annuity, and 29% thought that between a 25% and 50% would do so. A further 33% think between 50% and 75% of employees would purchase an annuity.
Also Thursday, the Association of British Insurers, a trade body for the insurance industry, said sales of annuities had fallen by more than a third between the first and second quarters of 2014.
In the three months ended June 30, 46,368 annuities were sold at a value of £1.8 billion ($2.9 billion), down 37.6% and 27.7%, respectively, compared with the three months ended March 31.