Is a fixed term annuity right for you?

Unsure about how to access you pension savings, or looking for a fixed, guaranteed pension income for life? We look at the options.
How to get the most out of your pensionHow to get the most out of your pension
How to get the most out of your pension

In light of the UK’s decision to leave the EU, annuity rates have fallen, with many annuity providers cutting their rates. This has given retirees a tough decision to make about how best to access their pension and get the level of income they need to live off during their retirement.

Many people want a fixed, guaranteed pension income for life from their pension savings, which only an annuity can provide. Despite rates slipping, it’s still worth considering an annuity amongst alternative options because with an annuity, factors such as your health and lifestyle can actually help you to see an uplift in your pension income by potentially as much as 40%1.

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There is a possibility that the annuity rate you’ll receive from your ceding provider may not be the best rate on the market, so it’s important that you shop around to make sure you’re getting the most from your pension savings.

Another potential alternative to consider is a fixed-term annuity. Fixed-term annuities offer a combination of security, with a guaranteed income for between one and 25 years, and flexibility for the future with the potential to secure a guaranteed amount once the term ends to choose another income option.

As well as providing a regular income for your fixed period, you can also secure a guaranteed maturity value at the end of the period. This is the guaranteed sum available at the end of a fixed-term annuity. This amount can then be used to invest in another pension-income option, for example, an annuity if you feel that you’d then like to gain a guaranteed income for life.

A fixed-term annuity may be right for you if you’d like to delay a lifetime decision on a pension annuity, access your tax-free cash now, with or without an income. It also allows you to wait in case circumstances or annuity rates change, protect your savings for your beneficiaries when you pass away, or keep your options open in the future to choose another income option.

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However, if considering a fixed-term annuity, you need to bear in mind that once it ends, lifetime annuity rates may not have improved when compared to the start of your term, and your remaining maturity amount may not be able to provide you with the level of income you have become accustomed to for retirement.

Whether you decide to choose a fixed-term annuity or another pension income option, it’s important that you seek professional advice or guidance from an individual or company like Age Partnership who are regulated by the Financial Conduct Authority (FCA) to ensure you remain protected and understand all the risks associated with each pension-income option.

With so much information available, it’s reassuring to have a simple pension calculator that will give you an accurate snapshot, backed up by well-informed, regulated advice or guidance on the ways you can make your pension work for you.

To find out more, visit or call Freephone 08000 810 815.

1 Source: Moneywise, 2015.

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