Rachel Reeves’s inheritance tax changes encourage more people to invest in previously unloved product
The government’s “inheritance tax raid” on pensions has helped drive sales of retirement annuities to new highs.
Industry data this week revealed they enjoyed a “record-breaking” 2025, with sales growing by 4% to £7.4bn and the average amount invested in an annuity surpassing £80,000 for the first time.
Some of this enthusiasm for what many people traditionally viewed as a dull, poor value product, has been put down to people who are keen to ensure that no more of their cash than is necessary ends up in the hands of HM Revenue and Customs. In addition, many are seeking some certainty in turbulent times.
An annuity is a product that converts an individual’s pension pot into a regular, guaranteed income for the rest of their life (or for a fixed term). They pay a life insurance company a lump sum, and, in exchange, it guarantees a regular payout.
