Sales of escalating Guaranteed Income for Life annuities that have some inflation protection, accounted for a fifth of all sales in 2024/25 and have increased by 17% year-on-year.
Enhanced annuity sales also increased as a proportion of total GIfL sales to 48% in 2024/25 compared to 38% six years ago.
Analysis of the latest FCA data by retirement specialist Just Group revealed the rise in escalating and enhanced annuity sales.
In 2024/25, 17,427 escalating GIfL products were purchased compared to 14,898 in 2023/24. They now account for 20% of total sales, 6 percentage points higher than 2018/19 when they accounted for 14%.
Opting for escalating guaranteed income for life solutions protects pensioners against inflation, as rather than providing a fixed income, it starts at a lower level but rises over time either through a link to inflation or at a pre-agreed percentage increase, said Just.
The proportion of enhanced guaranteed income for life solutions also climbed noticeably in recent years with 42,339 sold in 2024/25, an 18% increase from 2023/24 when sales were 35,826. They now account for almost half of total sales, an increase of 10 percentage points compared to 2018/19.
The FCA data on enhanced GIfL products accounts for those underwritten on medical or lifestyle factors such as smoking, which typically provide an uplift in the rate available compared to non-medically underwritten products and deliver a higher level of income.
Stephen Lowe, group communications director at Just Group, said the figures were evidence of better-informed decision making by customers: “It is good to see more customers tailoring Guaranteed Income for Life products to suit their personal circumstances, often securing a higher level of income in the process.
“Our own analysis suggests around two-thirds of GIfL customers could be eligible for enhanced rates so we are slowly nudging towards a situation where the majority of customers are benefiting from the best rate available to them.
“The shockwaves of the inflation spike following the pandemic may be influencing customers’ decisions when purchasing Guaranteed Income for Life, with a notable uptick in escalating plans being purchased.”