Pension annuity sales hit record as average pot exceeds £80,000

The Guardian - World NewsEN 2 min read 100% complete by Rupert JonesFebruary 14, 2026 at 08:00 AM

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medium article 2 min

Pension annuity sales reached a record £7.4 billion in 2025, a 4% increase, with the average investment exceeding £80,000. This growth is attributed to upcoming changes to inheritance tax (IHT) on pensions, announced in October 2024 and taking effect in April 2027. The changes will bring unused defined contribution pension funds into the IHT net, incentivizing individuals to convert pension pots into annuities to avoid potential taxation. Additionally, annuities are now offering better value with higher payout rates compared to previous years, making them a more attractive option for retirement income planning. The data was issued by the Association of British Insurers.

Key Entities & Roles

Key Player Opposition Context

United Kingdom 40% Clare Moffat 50% Marianna Hunt 50% Royal London 60% Association of British Insurers 60% Fidelity International 60% HM Revenue and Customs 70% Rachel Reeves 80% Inheritance Tax ×490%

Keywords

pension annuity 100% inheritance tax 90% retirement income 70% pension pot 60% annuity rates 50% defined contribution pension 50% pension freedoms 40%