Rising interest rates have generated a surge of annuities buying by pensioners, new data from the FCA has shown.
Annuity sales jumped by almost 39% between 2022/23 and 2023/24, said the watchdog, to 82,061 from 59,163.
Rising rates on the product, which pay out at a fixed rate until the holder dies, are helping fuel the demand, said financial commentators.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “The latest data on the (Hargreaves Lansdown) annuity comparison tool shows a 65-year-old with a £100,000 pension can get up to £7,146 per year from a single life level annuity.
“This is up around 43% on what they would have got just three years ago.
Numbers of people accessing their pension plans for the first time also rose, said the FCA, climbing 19.7% in 2023/24 to 885,455.
Morrissey warned, however, that advice is needed before deciding what type of annuity to buy adding that the the annuity purchases were overwhelmingly taken on single life and level basis.
“This potentially means there are spouses that could be left with nothing when their partner dies.
“In addition, a sudden surge in inflation like we have seen in recent years could whittle away the purchasing power of that level annuity that looked such good value just a short time ago.”