LONDON, March 26 British life and pensions group Legal & General expects the size of the UK market for individual annuities to shrink by around three-quarters after 2015 when retirees will no longer be forced to buy them.
The forecast, delivered in a speech to an investor conference in London on Wednesday by L&G Chief Executive Nigel Wilson follows a radical shakeup of the pensions system announced by finance minister George Osborne.
L&G expects the market to shrink from 11.9 billion pounds ($19.64 billion) currently, to around 2.8 billion pounds.
The reforms, due to be implemented in April next year, effectively scrap a system forcing most retirees to swap their pension savings for an annuity that pays out an income for life, giving them a choice in how they want to invest their savings.
Wilson said L&G expects retirees to take more of their savings in cash and rely more on their property as a source of retirement income.
"We certainly expect to see more cash being taken out, either singly for small pots or across several years, and we expect to see more use of the housing asset as pots get depleted more quickly," he said.
($1 = 0.6059 British Pounds) (Reporting by Chris Vellacott. Editing by Steve Slater)