The ABI says that despite reports to the contrary, customers are taking a “common sense approach” with initial demand for cashing in pensions settling down.

It says that annuities are starting to see a revival in popularity and the number sold outstripped income drawdown products for the first time in the most recent quarter with 21,200 sold, worth £1.1 billion, compared with 19,700 drawdown policies, worth £1.4 billion.

Overall, since the reforms came in in April 2015, the figures show for pay-outs:

• £3 billion has been paid out in 213,000 cash lump sum payments, with an average payment of £14,800
• £2.9 billion has been paid out via 835,900 income drawdown payments, with an average payment of £3,500.

Since the reforms came in, for funds invested in new products:

• £4.2 billion has been invested in 63,600 income drawdown products, with an average fund of £66,000
• £3.3 billion has been invested in around 61,700 annuities, making the average fund invested nearly £53,000.

The ABI’s director of policy for Long Term Savings and Protection, Dr Yvonne Braun, said: "One year on from the pension reforms, the freedoms are settling in and working as intended. This is a credit to providers who worked incredibly hard to get ready for the changes with less than a year to implement them.

“Following some initial pent up demand, the number of people accessing their pension pot as cash in one go has settled down. People are taking a sensible approach and considering how they will pay for their whole retirement. Annuity sales are beginning to see a revival, with more annuities than drawdown products sold in the last quarter. This shows people still really value a lifelong guaranteed income.

“Our key challenge remains ensuring people save enough for their retirement. With increasing life expectancy and declining final salary pension provision, we must turn our attention to helping customers grow bigger pots.”

The data covers the period up to the end of Q4 2015 and includes Legal and General.

Key trends from the first nine months of data:

• Smaller pots are generally being taken as lump sums, with an average pay out of £14,800
• Larger pots are still being used to access a regular retirement income, with an average fund invested of £59,600. Almost £7.5bn has been invested to buy nearly 125,500 regular income products, either annuities or income drawdown products
• Annuity sales are recovering since the beginning of the reforms, with sales of new annuity products nearly on a par with drawdown. For the most recent quarter (Q4 2015) annuities proved more popular with new customers than income drawdown products with 21,200 sold, worth £1.1bn, compared with 19,700 drawdown policies, worth £1.4bn
• People are tending to use drawdown as a regular income product, with 65% withdrawn in Q4 2015 worth £1,000 or less. The majority of withdrawals from drawdown policies are from people in their 60s, with 62% of the value of withdrawals going to this age group in the last quarter
• The data shows that the amount of cash lump sum withdrawals is decreasing as the pent up demand following the reforms settles. Around £660m was withdrawn in cash in Q4 2015, compared to £1.3bn and £1.2bn in Q2 and Q3 respectively. Over half (55%) of cash withdrawals were less than £10,000
• In particular cash lump sums are proving popular with under 60s, with half of the value of cash lump sums being taken out by this age group in the last quarter.