UK Annuity Sales Surge as Over-75 Pension Buyers Quadruple to 5.5%
Updated
Updated · Financial Times · Jun 26
UK Annuity Sales Surge as Over-75 Pension Buyers Quadruple to 5.5%
2 articles · Updated · Financial Times · Jun 26
Summary
Standard Life said the share of over-75 customers using pension money to buy annuities rose to 5.5% in January-June, more than four times the level a year earlier.
April 2027 tax changes are driving the shift: unused UK pension pots will fall into inheritance tax, making annuities a way to create surplus income that can be gifted free of IHT.
Higher rates have added to the appeal, with annuities for older retirees typically paying up to 9%; quotes for policies above £1 million doubled and average premiums rose 14% to more than £100,000.
HMRC-based estimates from Eversheds Sutherland show nearly 50,000 people a year could face new or higher IHT once the rules start, while advisers warn combined taxes on inherited pensions can exceed 89% in worst cases.
Is the UK's new pension tax secretly designed to end large, tax-free family inheritances?
Are retirees overlooking irreversible risks of annuities in the rush to dodge a 40% inheritance tax?
UK Annuity Sales Surge 10% to Decade High Amid IHT Reform: How Rising Rates and Tax Changes Are Reshaping Retirement Planning
Overview
The UK annuity market is experiencing a strong resurgence, fueled by attractive annuity rates and a growing focus on inheritance tax planning. This shift is changing how retirees approach financial planning, with many now viewing annuities as a tool for both guaranteed income and broader estate strategies. Escalating annuities, which protect against inflation and the erosion of income over time, have become especially popular, with sales reaching over 18,000 in 2025—a 10% increase from the previous year. These trends highlight a move toward more sophisticated annuity choices and a greater emphasis on long-term financial security.