Speaking after last week’s Budget – which outlined a major overhaul of the annuities market, effectively removing the requirement to ever purchase one – L&G’s group CEO told a conference the group is forcasting a huge slide in revenues from annuities over the next two years.

Nigel Wilson told delegates at a Morgan Stanley investor conference the group is forecasting the £11.9bn-a year market in individual annuities to fall to just £2.8bn by the end of 2015.

Wilson said: “We do expect individual annuity sales to go down, including for internal vestings, which have been the subject of regulatory intention, and enhanced annuities: if you have a short life expectancy, you are more likely to take cash.”

“In total, we expect the individual annuities market to drop from £11.9bn to £2.8bn of premium.”

Wilson said savers with small pots below £10,000 would likely cash the entire lump sum in as a result of the rule changes in Chancellor George Osborne’s latest Budget.

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Even for larger pots, Wilson said the group is predicting a market fall of more than two-thirds, from £5bn in premiums to £1.5bn.

In its place, Wilson said there would likely be an increase in drawdown and new products, which are “lower margin, but also less capital-intensive for providers”.