UK retirees are turning to annuities in record numbers after April 2027 tax reform. Standard Life reports that the share of customers over 75 using pension funds for annuities has jumped from 1.3 % in 2024 to 5.5 % this year. Higher‑value quotes above £1 million have doubled, reflecting a shift in strategy.

The surge follows the rule that unused pension pots will now fall under inheritance tax, upending previous planning advice. Clare Moffat of Royal London explains that annuities create surplus income exempt from death duty, allowing retirees to give away amounts that would otherwise trigger high IHT. Experts say the option can push effective marginal tax rates toward 89 % for retirees.

Standard Life’s average annuity premium has risen 14 % year‑on‑year, from about £91,000 in 2025 to over £100,000 in 2026. Analysts predict demand will grow again as the 2027 start date nears. The product’s appeal lies in its ability to lock in rates up to 9 % for older retirees while sidestepping IHT.

The move signals a shift from a one‑off retirement decision to continuous portfolio review. Eversheds Sutherland estimates that nearly 50,000 people will face higher IHT once the rules change. For insurers, the trend boosts sales volume and reinforces the value of annuities as a tax‑efficient vehicle, reshaping the UK retirement market and helping investors plan for future uncertainties and ensure.