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Gross sales of retirement annuities jumped by greater than a 3rd between 2022/23 and 2023/24, in response to figures from the Metropolis regulator.
Annuities gross sales elevated by 38.7%, from 59,163 in 2022/23 to 82,061 in 2023/24, the Monetary Conduct Authority (FCA) mentioned.
Retirees can use cash from their pension pots to purchase annuities, which give them a assured revenue to reside on.
Pension consultants instructed that improved charges have helped to provide annuities a reputation increase.
The FCA’s retirement revenue market knowledge additionally confirmed that the entire variety of pension plans accessed for the primary time elevated by 19.7% in 2023/24 to 885,455, up from 739,652 in 2022/23.
We are able to count on this curiosity to proceed
Helen Morrissey, Hargreaves Lansdown
Helen Morrissey, head of retirement evaluation at Hargreaves Lansdown, mentioned: “After years on the sidelines of the retirement revenue market, annuities are having fun with their time within the solar, as growing rates of interest pushed incomes skyward.
“The most recent knowledge on the (Hargreaves Lansdown) annuity comparability instrument reveals a 65-year-old with a £100,000 pension can stand up to £7,146 per yr from a single life stage annuity. That is up round 43% on what they might have gotten simply three years in the past.
“We are able to count on this curiosity to proceed as retirees resolve to make the leap sooner moderately than later as incomes are set to fall again because the Financial institution of England cuts charges within the coming months.”
She added: “It’s nice that persons are getting good worth from the annuity market, however the knowledge additionally reveals that folks might not essentially be choosing the very best product for his or her wants.
“Annuity purchases have been overwhelmingly taken on single life and stage foundation. This doubtlessly means there are spouses that could possibly be left with nothing when their accomplice dies.
“As well as, a sudden surge in inflation like we now have seen lately might whittle away the buying energy of that stage annuity that appeared such good worth simply a short while in the past. It’s very important that you just contemplate what you want out of your retirement revenue and look throughout the market earlier than deciding to buy an annuity moderately than taking the primary or highest revenue provided.”
Given annuities supply peace of thoughts that retirees’ cash won’t run out throughout retirement it’s maybe unsurprising that extra engaging charges have led to a surge of recognition
Rob Hillock, Broadstone
Stephen Lowe, group communications director at retirement specialist Simply Group, instructed that folks contemplating accessing pension cash might take the free, unbiased and neutral steerage from the Authorities-backed Pension Smart service or contemplate enlisting the providers of an annuity dealer or a monetary adviser who can assist to scour the market.
Rob Hillock, a senior supervisor within the private monetary planning workforce at main unbiased consultancy Broadstone, mentioned: “The rise in annuity charges has fed by way of into a big rise in gross sales by way of 2023/24 as pension savers rush for safety and to lock in elevated charges.
“Given annuities supply peace of thoughts that retirees’ cash won’t run out throughout retirement it’s maybe unsurprising that extra engaging charges have led to a surge of recognition.
“Total, the image within the retirement revenue market is of extra individuals reaching retirement with outlined contribution (DC) pensions resulting in a rise in entry and cash flowing into these merchandise.”
