Analysing the FCA annuity data for 2024-2025

19 December 2025

By Mark Ormston, Chief Compliance Officer

Retirement Line’s Mark Ormston looks at annuity trends from the Financial Conduct Authority’s latest retirement income market data report. 

We previously published Mark’s analysis of the FCA’s annuity data from April 2018 to March 2024. Now he dives into the FCA’s latest data, focusing on changes from 2024 to 2025. 

He picks out some of the most significant trends – in particular continuing growth in annuity sales and in people shopping around for the best annuity income.

You can find Mark’s full analysis of the 2024-25 annuity data here. The data used in his analysis has been taken from the latest FCA retirement income market data full data tables.

Contents:

Highlights from the data

About the data

Important: use of the word ‘pot’

Size of the annuity market

The age of people purchasing annuities

The size of pension pots used to buy annuities

Where do people purchase their annuities?

Annuity death benefits

Level payments vs escalating payments

Highlights from the data

Before delving into the detail, here are my top three key takeaways from the data:

• Growth in annuity purchases. The annuity market has grown by around 10% in the most recent reporting period. However, annuity purchases remain at around 9% of total pots being accessed for the first time.

• More people are shopping around for an annuity. Annuities purchased away from the consumer’s existing pension scheme provider is at its largest percentage since the FCA started producing this data.

• More people with pots under 50k are shopping around. A particular trend is that many more people with a pension pot of less than £50,000 are now shopping around for their annuity. 

About the data

The FCA uses its market data to monitor actions consumers take when accessing their defined contribution pension savings. It makes that data public so that the pensions and wider financial services industry can better understand consumer behaviour and inform decision-making.

This is the second year that I have brought the latest data together into a document that will, I hope, act as a valuable source of analysis of annuity trends. 

Important: use of the word ‘pot’

Before we get into the data, it’s worth mentioning the way that the FCA uses the word ‘pot’. Throughout the data, there is mention of a ‘pot’ used to buy an annuity. My understanding is that the FCA uses ‘pot’ to mean a single annuity purchase. 

In reality, people often use more than one pot to make an annuity purchase, so this needs to be remembered when unpicking the data.

Size of the annuity market

Once again, the latest annual data shows a noticeable year-on-year increase in annuity purchases: 

• Annuity purchases by volume grew by 8%. The increase is from around 82,061 purchased in April 2023 to March 2024, to 88,430 in 2024-25. 

• Annuity purchases by fund value grew by 12%. The total value of pension funds used to buy annuities increased from around £6billion in 2023-24 to over £6.7billion in 2024-25. 

However, annuity purchases remain at around 9% of total pots being accessed for the first time. Therefore, these increases are in line with the overall growth in pots being accessed.

The age of people purchasing annuities

There was very little change in terms of the age when people purchase annuities. Once again, the age group that purchased the highest number of annuities was 65-74. There was just a couple of percentage points drop for this group, and a percentage point increase for both the 56-64 and 75+ age groups. 

I doubt that there is any particular significance here, except to say that there doesn’t seem to be a huge trend for people accessing annuities before retirement to lock in today’s higher annuity rates.

The size of pension pots used to buy annuities

There wasn’t a significant difference in the year-on-year data here. Once again, the data shows that pot sizes of less than £10,000 continue to represent just 9% of annuity purchases. This isn’t surprising, since it is understandable that many people with small pot sizes will choose to cash out and manage the pot themselves.

Where do people purchase their annuities?

The FCA data splits annuity sources into three categories:

• Annuities purchased from the customer’s existing pension scheme provider (classified by the FCA as “purchased by existing customers”).

• Annuities purchased directly from another annuity provider (“purchased by a new customer”).

• Annuities purchased via a 3rd party, such as an annuity broker or financial adviser (“purchased via a 3rd party including panels”).

Last year, I noted that more people were now buying their annuity from someone other than their existing pension scheme. That trend continued in 2024-25, with the percentage of purchases from the consumer’s existing scheme falling from 41% to 38%. 

It’s clear that even more consumers are now proactively shopping around providers for the best annuity rate and more income. This growth of people taking up their ‘open market option’ is very encouraging.

A significant trend is that 10% more people with a pension pot size of less than £50,000 shopped around for their annuity (compared to just 2% more in 2023-24). This is especially encouraging. It suggests that industry efforts to educate people about the benefit of shopping around are having an impact across the board.

Annuity death benefits

There are a number of ways that consumers can build death benefits into their annuity:

• Joint life annuity. A beneficiary will receive income after the death of the annuity holder.

• Value protection (also known as capital protection). The annuity provider will pay a lump sum to a beneficiary when the annuity holder dies. The size of this payment depends on how much of their fund someone wishes to protect. 

• Guarantee period. This is where the annuity provider pays income for a guaranteed term, even if the annuity holder passes away within that period. Upon death, a chosen beneficiary receives income for the remainder of that period. 

In 2024-25, the take-up of joint life annuities fell by 1%, and the take-up of guarantee periods fell by 2%. There was a 1% increase in the use of value protection.

It is in fact difficult to work out the numbers (rather than percentages) of people choosing each of these options. However, I think we can say with confidence that a guarantee period is the most commonly selected annuity option. That would make sense at a time when annuity rates are so competitive, as longer length guarantee periods can often achieve similar results as value protection and be more cost-effective.

Level payments vs escalating payments

In 2024-25 the industry saw a 1% increase in the number of customers choosing escalating annuity payments. This is a form of inflation-protection, and the small uptick in people choosing this option may reflect ongoing concern about inflation.

I hope that this summary and my full analysis document prove useful for anyone with an interest in the annuity market. Please do let me know via mark.ormston@retirementline.co.uk if you have any questions or feedback, or indeed should you spot any errors in my analysis.