The total value of premiums paid into individual pension annuities grew 4% to £7.4 billion in 2025, according to the latest data from the ABI. This marks the highest annual level since pension freedoms were announced in 2014.
The rise in overall value comes despite a slight fall in the number of annuities sold, down 2% year on year to 87,600. This contrast shows people are annuitising larger pension pots to secure an income for life.
Sales of annuities over £250,000 rose by 31%, and sales of annuities valued at over £500,000 rose by 54%. This increase has driven the average annuity value to £84,000, passing £80,000 for the first time, a 7% annual increase.
The higher value of premiums is paired with an 8% rise in the number of people 70 and over buying an annuity suggesting those in later life are looking for stability while making the most of the favourable rates available to them.
One of the strongest areas of growth by product type was escalating annuities - products that increase payments each year - suggesting more customers are looking for protection against the erosion of income over time, including through inflation linked options. Sales of escalating annuities increased to just over 18,000 in 2025, up 10% from 2024 and the highest level recorded since 2013.
Bulk annuity activity
Alongside the individual market, bulk annuity activity in 2025 continued at scale, with £38.3 billion of defined benefit schemes secured by insurers to provide long term security for 332,500 people.
While premiums were lower than 2024 (£47.3 billion), the sustained number of people gaining long term pension security through bulk purchase annuities remains significant.
“A striking feature of this year’s data is the increase in the size of pots being annuitised, paired with people choosing to secure a regular income at older ages. It’s always been a good idea to ‘flex then fix’, using savings flexibly in early retirement, then locking in a guaranteed income at higher rates when certainty matters most. Now, with pensions coming in scope of inheritance tax from April 2027, choosing an annuity means a guaranteed income for life, with the option of providing for loved ones without worrying about potentially penal tax impacts.”
"Insurers bring scale, which means they can provide support for pension scheme members throughout retirement, and support for the economy through investment in housing, infrastructure and lending to UK businesses and government. With economic and policy conditions continuing to shift, a stable and clearly defined regulatory framework following the Pension Schemes Bill is essential to give schemes and their members confidence in a secure retirement."
Footnotes
This is according to the ABI's Quarterly Individual Pension and Bulk Annuity Sales data, published Thursday 12th February and available at https://www.abi.org.uk/data/data-packages/.
For more information, please contact press.office@abi.org.uk.