Are fixed-term annuities a retirement game changer?

More annuities were sold in the UK last year than at any time since the introduction of pension freedoms – a clear sign that guaranteed income is firmly back on the radar for those planning for retirement.¹

In today’s uncertain economic climate, this record-breaking swing has been fuelled by a growing consumer demand for financial certainty in later life, combined with the appeal of stronger annuity rates.

Standard Life’s Annuity Rates Tracker shows that average rates reached 7.72% in May 2025 - the highest level in a decade – making annuities a far more compelling option for clients seeking both stability and value.²

Both these upward trends represent a growing opportunity for advisers. In fact, according to the ABI, 36% of annuity buyers took advice in 2024 – up from 29% the year before.¹ This again reflects a clear shift as greater numbers look for professional support in order to navigate their retirement income decisions. And this is backed up by our own sales data which suggests the proportion of advised sales for annuities continues to grow.

The need for guarantees with a bit more flex

Since the pension freedoms were introduced ten years ago, the shape of retirement has continued to evolve. Where a hard stop to working life was once the expectation for most, as many as 2 in 5 people (42%) now plan to ease into their later years by reducing their working hours³ – and fewer than 1 in 8 (13%) say their retirement will be triggered by reaching a specific age. For the majority, it’s driven by affordability, health, and being able to enjoy life.⁴

Today, nearly nine in ten (85%) expect to rely on their State Pension to help fund retirement, but with eligibility starting at age 66, bridging the income gap is a real concern. In fact, 75% of over-50s say it’s an important issue. Indeed, one in five over-50s (19%) of those who have or plan to purchase a fixed-term annuity are doing so to help plug the income gap.³

Many will turn to their savings to cover the shortfall – 1 in 3 (33%) withdraw lump sums from pensions, similar numbers use cash savings, and 16% start using drawdown.³ While these strategies can help, they risk depleting resources too early and compromising long-term financial resilience.

This explains why fixed-term annuities are gaining particular traction in the market.

These products offer guaranteed income for terms as short as three years, with the flexibility to reassess options later - ideal for clients who want income certainty without committing to a lifetime annuity.

To meet this demand, Standard Life launched the Guaranteed Fixed-term Income product. It allows clients to choose a term between three and 25 years, with optional features like inflation protection and death benefits. At the end of the term, clients can access a maturity value or switch to another retirement product.

With more clients seeking advice and more flexible retirement options available, now is the time to explore how fixed-term annuities can support your clients’ evolving needs – and how you can help to lead that conversation.

^Sources:

^{1 ABI, February 2025}

^{2 Standard Life Annuity Rates Tracker, May 2025}

^{3 Opinium conducted research on behalf of Standard Life between 25 July and 12 August 2024 among 2,000 people over the age of 50}

^{4 Retirement Voice, Standard Life, 2024}