‘Money-Back’ guaranteed annuities account for 15% of plans sold

  • Canada Life highlights the most popular annuity guarantees from the past 12 months
  • ‘Money-Back’ annuities, introduced following The Pension Freedoms Act in 2015, now account for over one in ten (15%) of the guarantees sold
  • These annuities offer a slightly reduced annual income in exchange for a guarantee that at least the original purchase price will be returned to the estate (minus income received in the case of 100% value protection policies)


Canada Life has published data from its annuity sales which shows ‘money-back’ guarantees now account for over one in ten (15%) of plans sold. These annuities offer the customer the choice of 100% value protection or longer guaranteed income periods typically 25 years or more. Before the Pension Freedoms Act was introduced in 2015, the annuity market could only offer guarantee periods of up to 10 years.


Canada Life has said choosing the right guarantee alongside buying an annuity can add significant value as you can not only guarantee a lifetime income, but if you die early, an income stream to your beneficiaries, which can far outweigh the original annuity purchase value.


To illustrate the value of annuity guarantees, Canada Life has created a case study of Mark, 65, who is looking for a lifetime income. Mark wants to ensure Susan, who is 62, is looked after when he dies. Mark has a pension fund worth £140,000 to buy an annuity (net purchase price after he takes his 25% tax-free).


Based on having no medical conditions his options are:



Annual income

Maximum death Benefit

No guarantees



50% dependent’s income



100% value protection


£140,000 (remaining balance paid as a lump sum)

5-year income guarantee



10-year income guarantee



15-year income guarantee



20-year income guarantee



25-year income guarantee



30-year income guarantee



Source: Canada Life quotes 12.07.2021, for illustrative purposes only1


Nick Flynn, director of retirement income at Canada Life said:


“There has been a quiet revolution going on within the annuity market, driven by demand post pension freedoms for people to get their money back whatever happens in the future. These ‘money-back’ guarantees not only provide the risk-free certainty of income but address the elephant in the room that the insurance company keeps your money if you die early.


“A financial adviser or annuity broker will be best placed to help you understand the choices available, getting the most value from your pension savings while also ensuring your loved ones are protected, whatever the future may bring.  It’s important to note that many of these options are not available from many existing insurers, so make sure you use the open market option not only to get the best rate available, but also consider the full range of benefit options.”


Source: Canada Life annuity purchase options over the past 12 months. 12.07.2021



  1. Source: Canada Life annuity quotes (12.07.2021) based on the following: male age 65, female aged 62. Fund value £140,000 after tax free cash. Standard annuity rates, no health disclosures. Payment frequency monthly in advance. No escalation.