There has been a "significant" rise in the number of value-protected annuities purchased in the year 2025/26, according to analysis by Canada Life.

Canada Life’s analysis of Financial Conduct Authority’s (FCA) latest Retirement Income Market Data showed although value-protected annuities remain a relatively small part of the market, their share of annuity sales has increased to 9 per cent, up from 4 per cent in 2021/22.

The FCA’s data revealed that purchases of value protected annuities increased by 38 per cent year-on-year, while sales of escalating annuities rose by 27 per cent and open market annuities increased by 19 per cent.

In 2025/26, 8,737 value protected annuities were purchased, compared to 6,346 in 2024/25.

Canada Life's analysis also found that sales of escalating annuities rose by 27 per cent year-on-year, increasing from 17,427 in 2024/25 to 22,099 in 2025/26, and enhanced annuity sales increased by 25 per cent to 52,764, accounting for more than half of all annuity sales for the first time.

Meanwhile, open market annuity sales rose by 19 per cent, from 54,606 to 64,891.

Canada Life head of annuities, Kris Black, commented: “Growing take-up across a wider range of annuity options shows that awareness is growing about how annuity options can be tailored to suit individual circumstances in retirement.”

Black explained that protected annuities provide reassurance for people concerned about dying shortly after purchasing an annuity, as they are designed to return the purchase price, less any income already paid, to beneficiaries.

“It’s worth noting that a value protection lump sum is set to be included in inheritance tax calculations from April 2027, which may be a consideration for some retirees,” he said.

He noted that it is particularly encouraging to see the rise in open market annuities, “indicating that more customers are shopping around”.

“This helps secure not only a competitive rate, but also an annuity product that is structured around someone’s specific needs,” he said.

He added: “With annuity rates hitting decade highs in recent weeks, annuities are increasingly attractive for people seeking a reliable, predictable income for life that is not exposed to the ups and downs of investment markets.

“The forthcoming inclusion of unused pension funds in inheritance tax calculations is also prompting more people to reassess how they use their pension savings.

“Using some or all of a pension pot to purchase an annuity can secure guaranteed income for life whilst potentially reducing the value of a taxable estate.”

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