Sales of UK retirement annuities have soared to a record £7.4 billion in 2025, a 4% rise from previous years. The average amount invested in an annuity has also passed £80,000 for the first time, industry data reveals. This surge is linked to new inheritance tax rules on pensions, announced by Chancellor Rachel Reeves in October 2024. From April 2027, money left unused in a pension will be subject to inheritance tax, prompting many to buy annuities to protect their savings from HM Revenue and Customs. An annuity lets people convert their pension pot into a steady, guaranteed income for life or a fixed period. Buyers pay a lump sum to a life insurance company, which then provides regular payouts. Demand for annuities had dropped after 2015 when "pension freedoms" gave people more choice on how to use their pensions. But the inheritance tax changes are reviving interest. Clare Moffat from Royal London said, "With changes next year to inheritance tax and pensions, there has been an increased interest in using annuities for IHT planning." Annuities also give better returns now. Marianna Hunt of Fidelity International shared that a healthy 66-year-old with a £300,000 pension pot could buy an annuity paying about £22,440 annually—a 7.5% rate. Five years ago, similar pots would yield only around £13,500 or 4-5%. This means people are getting a much bigger guaranteed income, making annuities more attractive in uncertain times.