Insurers sold £7bn in annuities – which provides you with a yearly income for the rest of your life – in 2024, according to the Association of British Insurers (ABI).
Nick Flynn, retirement income director at Canada Life, said: “With people increasingly living longer lives, more individuals are seeking guaranteed income solutions, making annuities an attractive option.
The number of annuities sold rose by 24 per cent last year to 89,600, a 10-year high, however, it is still only a quarter of the 2013 figure.
It meant the number sold dipped to an all-time low of just under 50,000 in 2020, down from about 350,000 in 2013.
Despite the increase, annuity purchases continue to make up only a small proportion of the ways in which people access pension wealth.
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Read MoreStephen Lowe, group communications director at retirement specialist Just Group, said: “Competition is thriving in the retail annuity market thanks to the focus of financial advisers and brokers shopping around on behalf of their clients.”
He said this has contributed to a higher proportion of buyers securing enhanced annuity rates paying a higher income based on health history and lifestyle factors.
An individual who took out the same annuity at the age of 75 would receive £9,368 a year.
Income drawdown offer you complete control over your income withdrawals, whilst your pension remains invested.
“Annuity rates have improved over recent years – the current annuity rate for a healthy 65-year-old stands at 7.2 per cent and the rate for a 70-year-old stands at 8.2 per cent – and there is renewed focus on using these products to deliver income certainty.”
He added: “The change is likely to encourage wealthier savers to access more of their pensions and annuities are proving an attractive way of doing so.”
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