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Retirees pouring twice as much cash into annuities | Trustnet Skip to the content

Retirees pouring twice as much cash into annuities

18 August 2025

Soaring interest rates and gilt yields have pushed rates higher in recent years.

By Emmy Hawker,

Senior reporter, Trustnet

The average amount taken out in an annuity has skyrocketed by more than 160% since 2021 with savers putting six-figure sums into the retirement vehicle, according to Hargreaves Lansdown client data.

The average annuity in the first six months of 2021 was around £62,301, but this has increased to £162,729 in the same period of 2025.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “This indicates that the values on offer are appealing to a greater range of people and flies in the face of the idea that people with bigger pension pots opt for income drawdown.”

An annuity is a financial product that lets an individual pay a lump sum of money to ensure a guaranteed stream of income – usually paid monthly, quarterly or annually – often for the rest of their life.

Recent data from Hargreaves Lansdown’s annuity comparison service showed that a 65-year-old with a £100,000 pension pot can get up to £7,793 per year with a single life level annuity with a five-year guarantee. This is an increase from the £4,943 available in August 2021.

Annuity rates have “boomed” off the back of soaring interest rates and high gilt yields, Morrissey explained, noting that the recent decision by the Bank of England to cut the base rate from 4.25% to 4% has not put a dent in the incomes on offer.

However, it is crucial to do research before buying an annuity, Morrissey warned.

“Once bought, an annuity cannot be unwound and consider what you need very carefully,” she said.

If married or in a civil partnership, an individual may choose a joint rather than single life annuity, to ensure their partner is taken care of, Morrissey suggested.

There is also the impact of inflation over the long term to consider. “Starting incomes from inflation-linked annuities tend to be much lower than level products but, over time, they might be the right choice.”

Alternatively, an individual may choose to annuitise in segments throughout retirement and instead keep a portion of their pension invested through income drawdown, where it has the potential to grow and keep up with inflation, she added.

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