Quick summary: The total value of premiums paid into individual pension annuities in the UK reached £7.4 billion in 2025, representing a 4% year-on-year increase as citizens increasingly prioritise guaranteed lifetime income. Beyond financial security, data shows that these products provide measurable psychological benefits, with 51% of retirees reporting lower stress levels and greater financial confidence. For public policy and retirement welfare, these findings demonstrate that providing clearer pathways towards secure income options can directly safeguard the mental health and well-being of the ageing population.
The total value of premiums paid into individual pension annuities reached £7.4 billion in 2025, up 4% year-on-year, according to the latest data from the Association of British Insurers (ABI). This represents the highest annual level since pension freedoms were announced in 2014, with average annuity values reaching £84,000 in 2025. Experts note that annuities can form part of a blended approach, combining guaranteed income with other flexible options to meet both essential needs and lifestyle goals in retirement.
To support people approaching retirement in navigating these options with greater confidence, Legal and General (L&G) has launched a new guide and downloadable checklist. The initiative comes as annuities continue to play a significant role in retirement planning, offering a guaranteed income for life amid growing interest in financial security. L&G’s resources aim to simplify the process for those over 55 considering how to turn their pension pots into reliable retirement income. Researching options before requesting an annuity quote is essential to ensure people understand what is available, what suits their individual circumstances, and how to prepare questions for a financial adviser.
Research highlights retirement well-being benefits
Beyond the financial security of a regular income, annuities may support broader aspects of retirement life. A study of 3,000 UK retirees conducted by L&G and the Happiness Research Institute explored the relationship between retirement happiness and annuities to uncover what motivates people to choose this option.
The research revealed specific motivations and well-being benefits
- Motivations for choosing an annuity: Almost a quarter (23%) said the appeal of receiving a regular income for life was a key reason for choosing one. Meanwhile, 16% said an annuity makes budgeting easier, and 13% said it provides greater control over their finances.
- Impact on well-being: Retirees with an annuity are more likely to report lower stress levels (51%) and higher financial confidence (24% versus 21% among those without one).
Understanding the options
The different types of guaranteed retirement income L&G provides include
- Pension Annuity: Provides guaranteed payments for life. More details on Pension Annuity options, including enhanced, joint, and escalating annuities, can be found on L&G’s website.
- Fixed Term Retirement Plans: Allow you to choose an income for a set period, providing flexibility or a bridging income. You can also opt to receive a cash sum at the end. More details on Fixed Term Retirement Plans can be found on the L&G website.
An annuity income depends on factors such as age, health, and current annuity rates, making each quote unique to the individual. A quote from L&G provides a clearer understanding of potential retirement income and how to plan for retirement. It also highlights if a better price is available elsewhere through Annuity Ready, L&G’s lifetime annuity comparison service.
What the checklist covers
L&G has created an easy-access downloadable annuity quote checklist to encourage over-55s to be better prepared, ensuring they have all the correct information to hand when the time comes.
The checklist asks potential annuitants to gather
- Pension information: How much of your pension pot you would like to use, whether there are penalties for withdrawing money, and whether there are any implications when changing providers.
- Your medical history: When buying a Pension Annuity, you will need to provide details of your height, weight, alcohol consumption, smoking status, and any medical conditions. Some medical conditions could result in a higher income through an enhanced annuity.
- Your product preferences: How you would like your annuity to work. For example, do you want a lifetime annuity or a fixed term plan?
Step-by-step: How to get a quote
Getting an annuity quote with L&G is straightforward and can be done online using a laptop, tablet, or smartphone by following these steps:
- Register: Fill in your details and activate your account.
- Get financial advice: Although optional, seeking financial advice or guidance can help you find the right plan and make the process feel less daunting. L&G offers an advice service, while Pension Wise provides free, impartial guidance for over-50s.
- Answer questions: Complete the questions about your existing pensions to create a quote tailored to your needs.
- Receive your pension annuity quote: If you know what you want and have your paperwork to hand, you can receive your quote in just 15 minutes, with the option to download it as a PDF for future reference.
Industry leadership perspective
The launch of these resources reflects wider trends in the UK retirement market, where larger pension pots are driving higher annuity values even as the number of policies has changed only modestly.
Mike Batty, Managing Director for Home Finance and Product and Strategy Director for Retail Retirement at L&G, says: “We know that the stability of a guaranteed income has a real impact on well-being, giving retirees the confidence and peace of mind to enjoy their retirement. While the annuity market is growing, navigating the options can feel complex. Our guide and checklist are designed to cut through that complexity and make the process more straightforward.”
“We want to empower people to see how an annuity can form the secure foundation of a flexible, blended retirement plan. By covering essential costs, it allows other investments to provide for more of life’s wants. Ultimately, our goal is to give people the clarity and confidence to build the future that’s right for them.”