The total value of premiums paid into individual pension annuities rose 4 per cent to £7.4 billion in 2025, according to data from the Association of British Insurers (ABI).
The ABI said this is the highest annual total since pension freedoms were introduced in 2014.
The number of annuities sold fell 2 per cent year-on-year to 87,600. The ABI said the increase in overall value reflects people using larger pension pots to secure a guaranteed income. Sales of annuities worth more than £250,000 rose 31 per cent, and those over £500,000 increased 54 per cent. The average annuity value reached £84,000, up 7 per cent on the year and above £80,000 for the first time.
The ABI also reported an 8 per cent increase in the number of people aged 70 and over buying annuities.
Meanwhile, sales of escalating annuities, which increase payments each year, rose 10 per cent to just over 18,000 in 2025, the highest level since 2013.
In the bulk annuity market, insurers secured £38.3 billion of defined benefit liabilities in 2025, covering 332,500 people, compared with £47.3 billion in 2024.
ABI Assistant Director, Head of Long-Term Savings Rob Yuille says: “A striking feature of this year’s data is the increase in the size of pots being annuitised, paired with people choosing to secure a regular income at older ages. It’s always been a good idea to ‘flex then fix’, using savings flexibly in early retirement, then locking in a guaranteed income at higher rates when certainty matters most. Now, with pensions coming in scope of inheritance tax from April 2027, choosing an annuity means a guaranteed income for life, with the option of providing for loved ones without worrying about potentially penal tax impacts.”
“Insurers bring scale, which means they can provide support for pension scheme members throughout retirement, and support for the economy through investment in housing, infrastructure and lending to UK businesses and government. With economic and policy conditions continuing to shift, a stable and clearly defined regulatory framework following the Pension Schemes Bill is essential to give schemes and their members confidence in a secure retirement.”
Scottish Widows Retirement Director Carolyn Jones says: “More people are choosing annuities because they want greater certainty in an unpredictable economic climate. A guaranteed income for life gives them real reassurance, removing the worry about how long their savings need to last or how markets might move over time.
“We’re seeing more customers put larger pension pots towards annuities as they look for long‑term stability, and the ABI’s latest figures tell a very similar story. With more people now depending on defined contribution pensions, guaranteed income is becoming a much more central part of how they plan for a secure, comfortable retirement.”
