Sales of annuities – which convert a pension pot into an income for life – have plunged according to new research.
Sales of the controversial product, which has in the past been considered a bedrock of retirement planning, were down a staggering 16 per cent last year.
The Association of British Insurers' figures have been seized upon by commentators to suggest that annuities need urgent reform. The products have been criticised for poor returns and inflexibility.
Tom McPhail from independent financial advice firm Hargreaves Lansdown said that nevertheless he is surprised at the extent of the fall in annuity sales: "The retirement income market appears to be shifting, with demand for annuities collapsing. The first wave of baby boomers has passed age 65 but even so, we would expect annuity sales to stay high yet they were lower in 2013 than in 2011, when fewer people were reaching their mid-sixties.
"There are lots of factors at work here, including the wider economic background, sentiment about future interest rates and actual retirement ages; low annuity rates in recent years compared to historic averages may have had an impact too."