Legal & General (L&G) saw its individual annuity sales drop 40% in the first quarter of the year, with sales down from £406m in 2013 to £244m.
Its first quarter results said this included a circa £15m impact from cancellations during the extended cooling off period offered after the Budget changes were announced.
The firm has previously predicted the annuity market will shrink by as much as £9bn due to George Osborne’s reforms which make it possible for savers to access their whole pension fund age 55.
However, L&G said its retirement arm’s new business premiums quadrupled to £3.3bn in Q1, up from £0.8bn in 2013. It said the growth was mainly down to securing the largest ever UK bulk annuity contract with the ICI Pension Fund, which covered £3bn of the scheme’s liabilities.
It added the defined benefit (DB) de-risking market would continue to grow and it was ideally placed to capitalise on the trend.
The firm also said its workplace savings package would help workers use workplace ISAs over pensions and it was “ideally placed to provide alternative solutions to annuities”.
Total annuity assets increased to £38.3bn (Q1 2013: £33.3bn), reflecting record net inflows of £2.8bn for Q1 2014.
LGIM inflows approach £4bn
Its investment arm, Legal & General Investment Management (LGIM), reported net inflows of £3.8bn for the quarter, down from £4.7bn last year. It now has assets under management of £463bn, up 5% on this time last year when they stood at £441bn.
Its platform Cofunds generated net inflows of £1.5bn. Its assets under administration now total £65.6bn.
Other highlights included record retail protection sales, up 56% to £42m and steady UK group protection sales of £20m
L&G group chief executive Nigel Wilson said: "Legal & General delivered record results in Q1. Net cash and Operational cash, up 21% and 6% respectively, are at their highest-ever levels.
"We already benefit from favourable demographic trends; we have economically and socially useful products for customers; and with our LGIM economists forecasting 3% plus economic growth in the UK and US, we are excited about the prospects for our business."
He added there is strong demand for DB pension de-risking and predicted the defined contribution pension market would grow from about £250bn today to £3trn by 2030.
“LGIM's recent agreement to acquire Global Index Advisors (GIA), a US based DC provider will accelerate our US growth.
“In Q1 we invested in UK infrastructure and housing at a rate of around £100m per week, completing £1bn of transactions including Cala's acquisition of Banner Homes and a £252m investment in affordable housing provider Places for People which will finance 7,000 new homes."
£300bn of liabilities
View from the front row
Transfer from occupational scheme
Appointed by FCA and PSR boards