Sales of annuities, products which provide a guaranteed income for life, surged 22% during the first three months of 2023 according to our latest data.*
Annuity rates are strongly linked to interest rates, and the sharp rise in sales reflects the increase in interest rates seen over the past few months. Between January to March 2023, people bought 16,256 annuities. This is the largest number recorded since 17,252 were sold between July and September 2019.
Annuity premiums for the quarter totalled £1.2 billion. This is the highest value since 2015 when pensions freedoms were introduced which gave people more flexibility over how to access their retirement savings.
The bumper figures have also been bolstered by more people switching provider. For the first time since 2016, more than 10,000 people bought an annuity from a different provider to their pension savings provider, making up 64% of sales and totalling £847 million. In comparison, only 55% of sales were made by a different provider in the same period in 2022.
Customers also appear to be turning in greater numbers to products which protect them from inflation: sales of escalating annuities, which provide an income that increases every year, grew by 23%.
ABI Director of Long-Term Savings Policy Yvonne Braun said:
“Annuities offer a guaranteed income for life, like a final salary pension scheme. It's great to see more people taking advantage of the protection annuities have to offer, especially given the current favourable rates. Securing a guaranteed income for life remains an important part of the mix of options for people to consider at and during retirement."
Notes to editors
* Compared to Q4 of 2022.