Sales of value protected annuities jumped by 38% year-on-year, according to Canada Life’s analysis of the Financial Conduct Authority’s latest retirement income data.
In 2025/26, a total of 8,737 value protected annuities were purchased, up from 6,346 in 2024/25.
While accounting for the smallest proportion of total annuity sales, their share continues to trend upwards, now accounting for 9% compared to 4% in 2021/22.
Kris Black, head of annuities at Canada Life, said: “Growing take-up across a wider range of annuity options shows that awareness is growing about how annuity options can be tailored to suit individual circumstances in retirement.
“The benefit of value protected annuities is that they provide reassurance for people concerned about dying shortly after purchasing an annuity, as they are designed to return the purchase price, less any income already paid, to beneficiaries.
“It’s worth noting that a value protection lump sum is set to be included in inheritance tax calculations from April 2027, which may be a consideration for some retirees.”
The FCA data also showed strong growth among escalating annuities. In 2025/26, 22,099 escalating annuities were sold, an increase of 27% on the previous year. Escalating annuities offer retirees protection against inflation, with income steadily rising over time in line with inflation or a fixed percentage.
Meanwhile, sales of enhanced annuities rose by 25% with 52,764 sold in 2025/26 compared to 42,339 in 2024/25, meaning that, for the first time, they now account for more than 50% of all annuity sales.
Sales of ‘open market’ annuities – sold to new customers or via third parties – rose 19% with 64,891 sold in 2025/26 compared to 54,606 in 2024/25.
Black added: “It is particularly encouraging to see the rise in open-market annuities, indicating that more customers are shopping around. This helps secure not only a competitive rate, but also an annuity product that is structured around someone’s specific needs.
“With annuity rates hitting decade highs in recent weeks, annuities are increasingly attractive for people seeking a reliable, predictable income for life that is not exposed to the ups and downs of investment markets. The forthcoming inclusion of unused pension funds in inheritance tax calculations is also prompting more people to reassess how they use their pension savings.”
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