UK Annuity Market Soars to £7.4bn as L&G Unveils Crucial Checklist

Legal & General has launched a downloadable annuity quote checklist and an accompanying guide, specifically targeting savers aged 55 and over. This initiative comes at a time when the UK individual annuity market has experienced its strongest year in over a decade. Data from the Association of British Insurers indicates that total premiums paid into individual pension annuities reached £7.4 billion in 2025, marking a 4% year-on-year increase and representing the highest annual figure since the introduction of pension freedoms in 2014.

The newly released checklist is designed to help prospective annuitants gather essential information before seeking a quote from a provider. This includes details about their pension pot, relevant medical history, and product preferences. Legal & General states that a completed quote can be generated online within approximately 15 minutes. Furthermore, the firm promotes its Annuity Ready comparison service, which allows individuals to compare L&G's rates against the broader market offerings.

Alongside the product guide, Legal & General published research conducted in collaboration with the Happiness Research Institute, a Danish wellbeing think tank. This study, based on a survey of 3,000 UK retirees, revealed that annuity holders were more likely to report lower stress levels, with 51% citing this benefit, and demonstrated higher financial confidence at 24%. In contrast, only 21% of those without guaranteed income products reported similar financial confidence. The research also highlighted key motivations for choosing an annuity, with nearly a quarter of surveyed annuity holders prioritizing a regular income for life, while 16% valued easier budgeting, and 13% cited greater financial control.

Mike Batty, managing director for home finance and product and strategy director for retail retirement at L&G, commented on the findings, stating, “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.” The company’s own disclosures show its retail annuity sales reached £1.8 billion in its most recent financial year, positioning L&G as a significant player in a market that has seen a substantial recovery since defined contribution pension freedoms granted savers the right to drawdown in 2015.

The resurgence in annuity demand is attributed to a combination of factors. Higher interest rates have led to improved annuity pricing compared to the low-rate era, and an aging population with considerable defined contribution pension pots is now entering the decumulation phase. The market is also highly competitive, with several providers such as Aviva, Canada Life, and Just Group operating in the space. Product innovation, particularly around enhanced annuities for individuals with qualifying medical conditions, has further contributed to the market's dynamism by offering potentially higher incomes.

The regulatory environment also plays a crucial role, with the Financial Conduct Authority’s (FCA) Retirement Income Review and its ongoing focus on the Consumer Duty requiring providers to ensure customers are guided towards genuinely suitable products, rather than defaulting to existing pension provider offers. Legal & General’s checklist and comparison tool align with this regulatory landscape by guiding customers to shop around, which addresses the FCA’s long-standing concern that many retirees do not switch providers at the point of annuity purchase, potentially leaving significant income on the table. The future impact of L&G's tools, specifically whether they drive a measurable increase in inbound quote volumes and meaningful switching activity, remains to be seen, though these figures are unlikely to be publicly disclosed. Nevertheless, the underlying market trajectory suggests that the annuity segment will maintain its commercial significance for several years to come.