Sales of annuities reached a post pension freedoms high in 2023, new data from the Association of British Insurers has revealed.
Annuities reached a total sales value of £5.2 billion, an increase of 46% on 2022. It marks the highest annual value since 2014 when pension freedoms were announced.
The record year included a bumper fourth quarter which saw £1.5 billion in sales.
The ABI said the number of annuity contracts sold also increased last year to 72,000, up 34% year on year. This is the largest number recorded since 75,000 were sold in 2016, reflecting strong consumer desire to lock in a guaranteed income for their later years. The most popular option was level-only annuities, which accounted for 82% of the total number sold. The proportion of escalating annuities sold made up the remaining 18% of total sales.
The data also showed that 64% of annuity buyers shopped around in 2023.
Stephen Lowe, group communications director at Just Group, said: “What really stands out is the trend towards retirees shopping around for the best deal. In the final quarter of 2023, £75 of every £100 of pension savings used to purchase a guaranteed income for life, was invested by retirees who shopped around and chose to purchase their annuity from a different company to the one they used to build up their pension pot.
“This is a transformation in consumer behaviour , driven in part by a positive intervention by the Financial Conduct Authority to improve competition which has delivered better outcomes for customers.”
However, the ABI said only 29% of customers who bought an annuity did so with the help of professional advice.
Rob Yuille, head of long term savings policy at the Association of British Insurers, said: “Securing a guaranteed income for life remains an important part of the mix of options for people to consider at and during retirement and it’s great to see more people taking advantage of the protection they have to offer. However, we’d like to see more people taking advantage of professional advice and new forms of targeted support for consumers to ensure they can enjoy the best possible retirement.”
