Who is buying annuities?
According to Standard Life, annuity enquiries are on the rise from older, richer customers.
It found that the proportion of annuity quotes for more than £1m has doubled since 2024, and the proportion of customers aged over 75 asking for quotes has also quadrupled in the same period – both driven by the Chancellor’s inheritance tax changes.
Pete Cowell, of Standard Life, said: “Annuities are firmly back in favour with older savers.
“It’s rarely just one driver, but a mix of life stage changes, shifting priorities and, increasingly, the prospect of pensions falling into the inheritance tax net is bringing the appeal of a guaranteed income back into focus.”
Michelle Holgate, of RBC Brewin Dolphin, said: “I’ve seen an uptick in gifting from clients, and while it is rarely down to just one rule change, the combination of recent policy changes and frozen thresholds has clearly brought these conversations forward.”
How much could a £1m annuity buy you?
For many wealthy savers, buying a seven-figure annuity is a very real possibility. With rates soaring, a healthy 65-year-old spending £1m would receive £77,000 a year for life, or £52,000 if they wanted it to increase each year with inflation, according to calculations from Quilter.
If they needed to provide 50pc of their annual payout for a surviving spouse after their death, this income would drop to £73,000 and £46,000 respectively.
However, if they waited until age 75 before purchasing, their pot would pay out £98,000 a year, or £72,000 with inflation-linking.
They could receive £90,000 or £65,000 if they wanted their spouse to receive half of the amount if they died first.