Keep your options open with a 
Fixed-Term Annuity

Fixed-Term Annuity

Following the changes made in the 2014 Budget along with the current pandemic, fixed-term annuities are more popular with retirees than ever. A fixed-term annuity allows you to retire now, taking the tax-free lump sum (if required) and then take an income of your choice for a set number of years. This can be anything from 1 years upwards. At the end of the term, a Guaranteed Maturity Amount (GMA) is paid and this can be used to buy an annuity based on future annuity rates which may be higher (although you don’t have to).

The main benefit of a fixed-term annuity is that it allows you to keep your options open - you avoid locking into a lifetime annuity at the outset. When the term ends, you can shop around again for whatever type of pension product suits your circumstances at the time. At that point your health and lifestyle which may have deteriorated, as well as your increased age and this will be taken into account to possibly entitle you to a better rate.

A fixed-term annuity allows those retiring now to access their tax-free cash and income, but defer making a decision as to how they take their income from their pension fund in the long term. However in the short term the tax-free cash can be used to pay off debts or for a one off purchase such as a holiday.