Purchases of value protected annuities have increased 38% year-on-year, according to the FCA’s latest retirement income market data.
Enhanced and escalating annuities also saw strong growth, as did the number of annuities sourced from the open market.
Analysis by Canada Life of the FCA figures revealed that in 2025/26, 8,737 value protected annuities were purchased – a 38% increase compared to 6,346 in 2024/25.
The firm said value protection annuities give customers peace of mind that they will always receive their full purchase value back, either as income through their lifetime, or to a spouse or beneficiary if they pass away.
They still account for the smallest proportion of total annuity sales, but their share continues to trend upward and now accounts for 9% compared to 4% in 2021/22 figures.
In 2025/26 22,099 escalating annuities were sold compared to 17,427 in 2025/26, a rise of 27%. Escalating annuities offer retirees protection against inflation, with income steadily rising over time in line with inflation or a fixed percentage.
Sales of enhanced annuities rose 25% with 52,764 sold in 2025/26 compared with 42,339 in 2024/25, meaning that, for the first time, they now account for more than 50% of all annuity sales. Enhanced annuities typically pay retirees a higher income if they have health conditions or lifestyle factors that may affect their life expectancy.
Sales of ‘open market’ annuities (sold to new customers or via third parties) rose 19% with 64,891 sold in 2025/26 compared to 54,606 in 2024/25.
Kris Black, head of annuities at Canada Life, said: “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.”
He said the benefit of value-protected annuities is that they 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.
He added: “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.”