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Pension annuities in LICs are more profitable than pension contributions in the UK

Following the introduction of amendments in pension legislation in 2015 the UK pension annuity market declined. Over time, insurance companies began to bring more profit to their customers than pension funds.
Pension annuities in LICs are more profitable than pension contributions in the UK

According to the Financial Conduct Authority (FCA) latest data, the British have bought 74,000 pension annuity policies over the past two years. This index is equal to sales for the period before 2015. The data of the Association of British Insurers show an annual market growth of 6%.

Experts explain their interest in the investment tool by higher returns. Thus, pension funds earn 3% per annum for depositors, and LICs - 4%. Market participants divide future retirees into two groups: those who appreciate simplicity and those who allow insured risks in investing. First group, as a rule, concludes contracts with pension funds in the amount of less than 100 thousand pounds.

The second group usually has pension assets exceeding £200,000. People in this group are more successful in their careers and retire later. They often turn to various (official and unofficial) sources for advice and consider themselves as financially literate. Thus, annuities play an important role especially for customers who do not want any investment risk, but want to be sure they have a lifetime income.

Source: https://www.professionaladviser.com/professional-adviser/news/3083496/greg-neilson

Photos are from open sources.

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