Strong sales growth in annuities is revealed in new data from the Financial Conduct Authority (FCA), with rates and market conditions being credited as key drivers.
According to the FCA’s Product Sales data, annuity sales witnessed a notable increase in 2022, rising to 46,620 from 44,191 the previous year and 41,284 in 2020. The sales momentum gained further traction in the last two quarters, with a total of 25,592 annuities sold in Q3 and Q4. This represents a significant 17 per cent increase compared to the same period in 2021, which saw 21,819 annuity sales.
The Association of British Insurers (ABI) also released its latest data, confirming the continued upward trajectory of annuity sales. The figures indicate a strong start to 2023, with a remarkable surge of 22 per cent in annuity sales during the first three months of the year.
Broadstone head of DC workplace savings Damon Hopkins says: “The return of the annuity was the retirement story of 2022. Sales increased as pension savers took advantage of the spike in interest rates and gilts to secure fixed retirement income at their highest level in years.
“The acceleration in Q3 and Q4 chimes with ABI data that suggests annuity sales are now starting to see significant increases as savers reaching retirement are attracted to the idea of securing income at a lower cost, given the rise of annuity rates as interest rates spiked over that period.
“As it stands currently, pension savers with a £100,000 pot looking to buy an annuity are likely to generate thousands of pounds more annual income compared to a couple of years ago which is clearly driving the higher demand for annuities.
“When it comes to securing a good standard of living in retirement, a lot of scrutinies is focused on contribution rates and investment returns, but decisions made at the point of decumulation can be vital in maximising savers’ pots and may be worth significant sums.
“When it comes to annuities, simple steps like shopping around and disclosing medical conditions can be key to making hard-earned savings work harder and getting a better rate.”
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