Sales of pension annuity contracts increased by 24 per cent in 2024 to 89,600, surpassing last year’s total and reaching a new ten-year high, figures from the Association of British Insurers (ABI) have revealed.

The latest pension annuity data from the ABI showed that total annuity sales reached £7bn last year, a 34 per cent increase from 2023.

ABI head of long-term savings policy, Rob Yuille, said the figures demonstrated the value of annuities as retirement products.

“Buoyed by improved rates, the appeal of a guaranteed income for life can help people achieve financial security in retirement.”

Echoing this, Standard Life head of annuities, Pete Cowell, claimed the surge reflected the rising demand among retirees and a shift in how financial advisers consider these types of products when speaking to their clients.

“There is increasing recognition of the flexible ways a guaranteed income can be integrated into a broader decumulation strategy, creating a tailored retirement plan based on a client’s needs.”

Six providers offered annuities to new customers, and in 2024, seven in 10 (69 per cent) of annuity buyers switched - taking an annuity from a different provider to the one they held their pension savings with - compared to 64 per cent in 2023.

The most common age to purchase an annuity was 65, making up 20 percent of all sales.

The ABI’s data also showed that more annuity purchases occurred after taking financial advice in 2024, with 36 per cent of buyers taking advice beforehand compared to 29 per cent in 2023.

"It’s encouraging to see more people taking advantage of professional advice before purchasing an annuity, and are exploring the market to find the best income and a type of pension tailored for them," Yuille added.

Just Group communications director, Stephen Lowe, agreed, suggesting that the upward trend in people taking financial advice when buying an annuity showed consumers are increasingly heeding the message to shop around and not take the deal offered by their existing pension provider.

“These figures show that most retirees are now finding their way to the best annuity deal, in contrast to the past when many missed out," he stated.

"Regulatory scrutiny is now turning to the drawdown market where it is almost impossible for consumers to compare plans to find one best suited to their circumstances. Far too few are taking the professional help needed to find the best deal.”

The proportion of joint life annuities that provide for a dependant, enhanced annuities based on health and lifestyle underwriting, and escalating annuities that keep pace with inflation also increased.

Lowe said “competition was thriving” in the retail annuity market thanks to the focus of financial advisors and brokers shopping around on behalf of their clients.

Looking ahead, Cowell predicted that the demand for annuities would remain strong, particularly with changes from the October Budget bringing pensions into scope for inheritance tax from 2027.

“The change will likely encourage wealthier savers to access more of their pensions, and annuities offer an attractive way of doing so," he stated.

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