Pension savers have accessed almost £5bn from their pots following the widespread retirement reforms - dubbed 'pension freedoms' - introduced in April, while more people are "shopping around" for the best deals, according to the Association of British Insurers (ABI).
Smaller pots are generally being taken as cash, the 250-member body said, while larger pots are still being used to access retirement income, with £5bn invested to buy some 85,000 regular income products - either annuities or income drawdown.
Annuity sales saw their first quarter-on-quarter increase for more than three years, with some £1.17bn worth of sales in Q3 2015 compared with £990m last quarter.
The ABI's total sales figures contradict those published by HMRC last month, which suggested just £2.7bn had been accessed in the six months since April, though HMRC admitted its data was incomplete as providers are not currently obliged to report sales.
However, direct investment platform Hargreaves Lansdown suggested the ABI's data was also inaccurate - albeit to a lesser extent - as it may include drawdown arrangements set up before 6 April and did not include figures from all providers, including itself.
The ABI's payout figures suggest:
- £2.5bn has been paid out in 166,700 cash lump sum payments, with an average payment of just under £15,000.
- £2.2bn has been paid out via 606,000 income drawdown payments, with an average payment of £3,600.
For funds being invested:
- £2.85bn has been invested in 43,800 income drawdown products, an average fund of almost £65,000.
- £2.17bn has been invested in around 40,600 annuities, making the average fund invested nearly £53,300.
More savers are shopping around to find the best deal, according to the ABI, with 60% of people changing provider when buying an income drawdown policy.
This compares to 40% of customers who bought an annuity, the body said.
ABI chairman Paul Evans said: "We've responded exceptionally well to the new retirement freedoms.
"As expected, customers are taking smaller pots as cash and using larger pots to secure an income - about 40% with an annuity and 60% with a flexible income drawdown product.
"Around half are now switching away from the company they saved with to secure the best deal for their retirement income. Overall, customers appear to be behaving rationally, and I think we can all be proud of the speed with which we responded to help the Government's reforms succeed."
ABI director for long term savings policy Dr Yvonne Braun added: "The peaceful pension revolution continues. While providers continue to meet high levels of demand, it's clear that people are taking a sensible approach and considering how they will pay for their retirement.
"Despite some ringing the death knell for annuities, this seems to have been premature. An increasing number of people are recognising the value of a guaranteed income, with annuity sales rising this quarter. There are also initial signs that the number of people accessing their pension pot as cash is beginning to settle down, with larger pots continuing to be used to buy retirement income products.
"However, the figures also show that ensuring people save enough for retirement remains our key challenge. With life expectancy increasing and final salary pension provision declining, we must now turn our attention to helping customers grow bigger pots."
