UK sees surge in demand for fixed-term annuities

Summarised from 2 outlets · Updated 18 Oct, 12:56 · Archive

Financial firms report growing demand for fixed-term annuities, which provide income for a set period before paying out a lump sum.

Financial firms are reporting growing demand for fixed-term annuities, which bridge the gap between stopping work and reaching pension age. Sales have risen sharply over recent years, with advisers now seeing a fresh surge of interest in what they describe as a 'lesser-known' market option.

A fixed-term annuity converts a pension pot into guaranteed income for a set period – such as five or ten years – with an agreed lump sum paid at the end. According to Standard Life, a 62-year-old with a £100,000 pension pot could receive guaranteed income for five years and a £50,000 lump sum afterwards. These products are typically available from age 55 with a minimum investment of around £10,000.

Unlike lifetime annuities, which provide income for life, fixed-term annuities offer flexibility once the set term ends, allowing people to reassess their options. Nick Flynn at Canada Life says these products appeal to retirees 'because they solve real challenges, helping retirees buy time before committing to drawdown or purchasing a lifetime annuity'. The renewed interest reflects higher annuity rates, tax changes and a desire for financial certainty during uncertain times.

How it is being reported

• Retirees turn to ‘lesser-known’ stipend to help gap between ending work and receiving state pensionFinancial firms are seeing a surge of interest in fixed-term annuitiesThe Independent · 18 Oct, 12:31
• UK sees growing demand for help bridging gap between end of work and start of pensionFixed-term annuities give income for a set period – such as five or 10 years – and an agreed lump sum at the end Financial firms are reporting growing demand for a product that helps bridge the gap between stopping work and getting your pension. Sales of retirement annuities have risen sharply during the last couple of years, and now advisers are seeing a fresh surge of interest in what they say is one of the market’s “lesser-known” options. Continue reading...The Guardian · 17 Oct, 07:00

In this story: Standard Life · Canada Life · UK

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