Annuities are increasing in popularity as retirees take advantage of gilt yields driving up annuity rates, according to the latest FCA data.
The retirement income market data for 2025/26 shows annuity purchases increased by 13.2% to 100,144 in the year ending 31 March 2026, up from 88,430 in the previous year.
However, experts are warning that savers should take advice before making any decumulation decisions.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “It’s vital to do your research before you purchase an annuity. An annuity can’t be unwound, so think about what type of annuity best meets your circumstances. If you’re married, you may want to consider a joint life annuity that keeps paying an income to your spouse when you die. Opting for the higher income offered by a single life annuity could see them left with nothing.
“You also don’t have to put all your eggs in one basket and annuitise your entire pension at once. Annuitising in stages lets you secure income as your needs evolve while some flexibility in drawdown.”
Adam Cole, retirement specialist at Quilter, said it is unsurprising more people are choosing to lock in a secure income stream for life rather than take on all the investment and longevity risk themselves against a backdrop of market volatility, inflation uncertainty and concerns about making retirement savings last.
He added: “However, the data also highlights a continuing challenge. More than half of annuity purchases are still made without either regulated advice or guidance, despite the irreversible nature of many of these decisions.”
This lack of advice also extends to drawdown customers, he noted.
“There is also a notable advice gap in drawdown as almost half of people entering drawdown now do so without regulated advice, compared with around a quarter when the FCA first began collecting this data.
“While drawdown offers valuable flexibility, decisions around withdrawal rates and how long retirement savings need to last can have a significant impact on long-term outcomes.”
