Annuity sales soar to 10-year high

17 February 2025

UK pension savers used more than £7 billion to secure guaranteed income with an annuity in 2024 – a 34% increase on the previous year. 

The Association of British Insurers (ABI) has just reported on its annuity data for 2024. Their data shows that increasing annuity rates have led to savers using more money to secure guaranteed income with an annuity in 2024 than at any point since the launch of pension freedoms in 2014.

The number of annuities sold also jumped by 24% last year, with 89,600 annuities bought. That’s the most in a single year for a decade.

The ABI’s Rob Yuille says: “These figures demonstrate just how valuable annuities are in the mix of retirement products. Buoyed by improved rates, the appeal of a guaranteed income for life can help people achieve financial security in retirement.”

More people shopping around for an annuity

The other headline from the ABI data is that more people than ever are buying an annuity after shopping around for the best deal. Last year, 69% of annuity customers bought from a different provider to the one they held their pension savings with. That compares to 64% in 2023.

Looking back even further, ABI figures showed that just 36% of people bought an annuity by shopping around in the second quarter of 2009.

The increase in shopping around is good news for consumers, who can often secure a better annuity rate and more income by comparing annuities from different providers. A facility such as Retirement Line’s annuity quotes and information service can lead to potentially securing thousands of pounds of extra income over a person’s retirement.

Making the most of annuity options

The ABI also reports that consumers seem to be making better use of the choice and flexibility across annuity products. More people are choosing annuities beyond the traditional single-life conventional annuity, opting instead for:

• Joint life annuities. This is where your annuity income payments continue to be paid to your partner or dependents should you die before them. 

• Enhanced annuities. These pay a higher guaranteed annuity income for life if you have a qualifying health condition or have made a qualifying lifestyle choice such as smoking or drinking.

• Escalating annuities. This option is where your income payments start at a lower level than a traditional level annuity, but then increase annually, either by a fixed percentage or in line with the Retail Price Index (RPI).

Retirement Line’s Mark Ormston says: “The news that more people are exploring their options when it comes to annuity types and product features is very welcome. It’s further evidence that consumers are becoming better informed about their options, and not just taking the first annuity offered by their pension scheme.”

Industry reaction

As quoted in a Money Marketing report on the ABI data, Stephen Lowe of retirement specialists Just Group says: “It’s great to see shopping around and switching become the norm because it means more money in people’s pockets every year for the rest of their lives.”

Nick Flynn of Canada Life had a similar response, as quoted in FT Adviser: “With people increasingly living longer lives, more individuals are seeking guaranteed income solutions, making annuities an attractive option. 

“Our own experience indicates that larger pension pots are also being used to purchase annuities, as customers seek to take advantage of the current high rates available. It’s not uncommon to now see pension funds in excess of £500,000 looking to secure an annuity.”

Also in FT Adviser, Pete Cowell of Standard Life says: “We anticipate demand for annuities will remain strong, particularly with changes from the October Budget bringing pensions into scope for inheritance tax from 2027. The change is likely to encourage wealthier savers to access more of their pensions and annuities are proving an attractive way of doing so.”

Talk to Retirement Line about your annuity options 

If you are considering an annuity for retirement income, our friendly specialists are here to help. They will explain your options and explore how much guaranteed income you could achieve from your pension fund.

You can speak to our team today by calling freephone 0800 652 1316 or request a call back. Alternatively, use our free online tools for an instant estimate of how much annuity income you might expect to achieve.