Sales of annuities soared 20% in 2024 to £7 billion – with the Labour Party Chancellor humiliated.
Rachel Reeves has been left red-faced after scores of UK households escaped the clutches of HMRC and avoided an inheritance tax raid. Sales of annuities soared 20% in 2024 to £7 billion – with the Labour Party Chancellor humiliated.
An annuity means a pension is no longer invested and the only tax payable on income is income tax, if a pension income exceeds a saver’s personal tax-free allowance.
Pete Cowell, head of annuities at Standard Life, part of Phoenix Group, said Brits were increasingly choosing to access their pension now following changes to inheritance tax announced in October’s Budget.
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He said: “We anticipate demand for annuities will remain strong, particularly with changes from the October Budget bringing pensions into scope for inheritance tax from 2027.
“The change is likely to encourage wealthier savers to access more of their pensions and annuities are proving an attractive way of doing so.”
Stephen Lowe, group communications director at retirement specialist Just Group, said savers were getting more savvy by taking advice when buying an annuity.
He said: “The upward trend in people taking financial advice when buying an annuity – to 36% in 2024 compared to 29% the previous year – is very positive, as is the higher proportion of buyers securing enhanced annuity rates paying a higher income based on health history and lifestyle factors.
“The figures released by the ABI today show consumers are increasingly heeding the message to shop around and not take the deal offered by their existing pension provider. Seven in 10 (69%) switched from their own pension firm to a new provider when buying their annuity in 2004, up from 64% the previous year.”
He added: “Guaranteed income producing assets are very much in the consideration set alongside other assets. Sales of annuities are 66% higher than when pension freedoms were introduced in 2015. It’s great to see shopping around and switching become the norm because it means more money in people’s pockets every year for the rest of their lives.”
