Sales of pension annuity contracts jumped 24% in 2024 to 89,600, surpassing the previous year’s total and reaching a new 10-year high, according to the Association of British Insurers (ABI).
The latest pension annuity data from the trade body shows that total annuity sales reached £7bn in 2024, a 34% increase on 2023.
Six providers offer annuities to new customers, and in 2024, seven in 10 (69%) annuity buyers switched – taking an annuity from a different provider to the one they held their pension savings with – compared to 64% in 2023.
The most common age to purchase an annuity continues to be 65, making up 20% of all sales. The ABI’s data also shows that more annuity purchases occurred after taking financial advice in 2024, with 36% of buyers taking advice beforehand, compared to 29% in 2023.
The proportion of joint life annuities – which provide for a dependant – enhanced annuities based on health and lifestyle underwriting, and escalating annuities – which keep pace with inflation – also all increased.
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‘Annuities do have their place’
Rob Yuille, ABI’s head of long-term savings policy, said: “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.
“It’s also encouraging to see that more people are taking advantage of professional advice before purchasing an annuity, and are exploring the market to find the best income and a type of pension that is tailored for them.”
Clare Moffat, pensions expert at Royal London, said: “Nearly 10 years ago, the introduction of pension freedoms meant there was a dramatic decline in the amount of annuities sold. This was compounded by low annuity rates for many years.
“However, the increase in annuity sales in 2024 shows that annuities do have their place. Interestingly, people often say they don’t want an annuity, but when asked what they would like from a retirement income product, they list factors like certainty, simplicity, an income that will last as long as they do, and protection for their dependants. This description sounds a lot like an annuity.
“It’s also encouraging to see an increase in joint life annuities and escalating annuities. If you purchased an annuity in 2021, escalating by either CPI or RPI, you will be delighted with the growth in income because of the high rates of inflation. If you didn’t choose escalation, you’d be in a very different position as the purchasing power of your income will be reducing significantly. Although this means a lower income at outset, in times of high inflation, they have been invaluable.”
