The number of escalating and enhanced annuities purchased by pension savers has risen significantly, says Just Group.
The firm’s analysis of the latest data from the Financial Conduct Authority found that in 2024/25, 17,427 escalating annuities were purchased, an increase of 17% compared to 14,898 in 2023/24.
Escalating annuities now account for a fifth (20%) of total sales, up 6% on 2018/19.
Opting for escalating guaranteed income for life solutions helps to protect pensioners against inflation by starting at a lower level that rises over time either through a link to inflation or at a pre-agreed percentage increase.
Meanwhile, the proportion of enhanced annuities has also risen in recent years, with 42,339 sold in 2024/25 compared to 35,826 in 2023/24. Enhanced annuities now make up almost half (48%) of total sales in 2024/25, an increase of 10% on 2018/19 levels.
Stephen Lowe, group communications director at Just Group, said: “It is good to see more customers tailoring Guaranteed Income for Life products to suit their personal circumstances, often securing a higher level of income in the process.
“Our own analysis suggests around two-thirds of Guaranteed Income for Life customers could be eligible for enhanced rates so we are slowly nudging towards a situation where the majority of customers are benefitting from the best rate available to them.
“The shockwaves of the inflation spike following the pandemic may be influencing customers’ decisions when purchasing Guaranteed Income for Life, with a notable uptick in escalating plans being purchased.”
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