Jump in sales of pension annuities valued at over £250,000 and £500,000

Maike Currie, VP personal finance at PensionBee, said: “The jump in larger annuity purchases – especially among those aged 70 and over – shows savers are looking more carefully at their long-term retirement approach. They’re using their pension flexibly in early retirement and then choosing to lock in a guaranteed income later on when certainty becomes more important.

“This ‘flex then fix’ approach may make sense if what you’re solving for is the certainty of a guaranteed regular income. We offer annuities as part of our decumulation options through our partnership with Legal & General.

“If you are thinking about purchasing an annuity, it’s worth keeping an eye on inflation, which remains sticky. When you start taking an income from your pension, inflation can erode the value of your withdrawals. An ‘escalating’ or ‘inflation-linked’ annuity increases over time to keep pace with inflation, while a ‘fixed annuity’ doesn’t – which means the purchasing power of your retirement income can shrink with inflation. Alternatively, if you choose drawdown, your pension remains invested in the stock market and ongoing investment growth could outpace inflation.

“Either way, it’s important to remember that there’s no one-size-fits-all answer – the key is understanding what you want from your retirement. With the rules around pensions and inheritance tax changing in 2027, we expect even more savers will be looking carefully at their options, to understand what suits their overall retirement and legacy planning the best.”