Standard Life is seeing a shift in the profile of annuity demand, with both the proportion of older customers and larger case sizes increasing.
The proportion of quotes for customers aged over 75 has more than quadrupled since 2024, rising from 1.3% to 5.5% year-to-date in 2026. At the same time, Standard Life has seen an increase in the number of higher value cases, with the proportion of quotes over £1 million more than doubling over the same period.
This trend is being driven by a combination of attractive annuity rates and the income certainty they offer, but Standard Life believes Inheritance Tax (IHT) planning considerations are also playing an increasingly important role.
The inclusion of pensions within IHT from April 2027 has turned financial plans on their heads for wealthier individuals. Since the pension freedoms were introduced, financial advisers have typically recommended that wealthier clients should leave pensions untouched for as long as possible, as they could be passed on in a tax-efficient way.
However, given that an estimated 10,500 estates will be brought into paying IHT due to the change next year, with around 38,500 estates facing higher IHT bills than under previous rules, advisers and their clients are looking for ways to reduce their potential tax liabilities.
Annuities are one of several options open to advisers and their clients, as a purchase reduces the value of the individual’s estate. The income they produce can either be enjoyed by the client or gifted, potentially under the gifts from surplus income rules.
Options such as value protection or spousal benefits can be selected to ensure that, should the client pass away earlier than expected, the annuity will continue to pay out.
Standard Life research has shown that 39% of financial advisers expect annuities to become more popular due to the changes, and this trend is reflected in the size of annuities Standard Life is writing. The average annuity premium is up 14% year-on-year, increasing from around £91,000 in 2025 to over £100,000 so far in 2026.
Demand has also been supported by ongoing enhancements to the customer journey. Last year, Standard Life introduced an industry-first, fully digital, signature-free annuity application process.
In addition, Standard Life customers can access the Annuity Desk, where they receive whole-of-market comparisons and tailored guidance to help them make their decisions about what to do at retirement.
“We’re seeing growing demand from older customers as well as an uplift in larger annuity cases, reflecting how retirement needs and planning behaviours are evolving. The forthcoming inclusion of pensions within Inheritance Tax is prompting many to revisit how they use their pension savings, and annuities are one of a number of options available.
While multi-million-pound annuities are still a minority purchase, the market is experiencing strong demand due to the combination of income certainty and attractive rates. Rates are currently at historically strong levels, reaching post-pension freedoms highs in May.”
Pete Cowell, Head of Annuities at Standard Life
