Rise in interest rates pushes up UK annuity sales by 46%
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Individual annuity sales soared in 2023 with a total sales value of £5.2bn, up 46% from 2022, reflecting rising interest rates as more people are looking to secure a retirement income for life, according to research.
The figure represents the highest annual value since 2014 when pension freedoms were announced, which granted retirees more flexibility over how to access their retirement savings, said the Association of British Insurers.
Commenting on the ABI figures, Pete Cowell, head of annuities at Standard Life, said: “Annuities have benefited from rising interest rates and it’s clear that customers and advisers are responding to this, and seeing the benefits of having a guaranteed income as part of the wider mix of retirement income solutions.”
Just the fourth quarter saw £1.5bn in sales, off the back of a strong third quarter when sales totalled £1.4bn. The number of annuity contracts sold also increased in 2023 to 72,200, up 34% from 2022.
The ABI explained: “This is the largest number recorded since 75,000 were sold in 2016, reflecting strong consumer desire to lock in a guaranteed income for their later years.”
The association added that with six providers now offering annuities to new customers, 2023 also saw 64% of annuity buyers shop around – taking an annuity from a different provider to the one they held their pension savings with.
Rob Yuille, head of long-term savings policy at the ABI, said: “It’s great to see more people taking advantage of the protection they have to offer. It is also encouraging to see more people exploring the market to secure a higher income.”
Meanwhile, sales in the bulk annuity market reached £22bn in the Q4 2023, taking the yearly total to £49.3bn.
How do you think annuity sales will perform in 2024?
