Fixed Term Income Plans
Use Fixed Term Income Plans to “buy time” and bridge gaps without closing off future options.
Reflecting on retirement
Explore how annuities can provide flexibility and certainty
Design retirement income in stages – with certainty built in
Annuities are no longer considered the solution for the risk averse individual. With gilt yields still elevated, increasing longevity and a regulatory focus on foreseeable harms, guaranteed income is rapidly moving back to the centre of retirement planning.
The opportunity for advisers is not simply to write more annuities, but to use them more intelligently: in stages, and alongside drawdown to deliver more robust client outcomes.
Since the introduction of Pension Freedoms, many retirement strategies have defaulted to drawdown. That approach has clear appeal, but it hard wires in longevity risk and sequencing risk at precisely the time clients can least afford shocks. A more resilient model is to treat guarantees as a targeted risk management tool: used selectively to secure essential income, buy time in difficult markets and support clients’ behavioural needs.
Integrating annuities into holistic retirement strategies
The most effective use of annuities starts long before the “retirement date”. A structured, bucket based framework can make this tangible for clients:
- Essentials: housing, utilities, food and healthcare, underpinned by a blend of state pension, Defined Benefits (DB) income and lifetime annuities.
- Lifestyle: travel, leisure, discretionary spending, mainly funded from drawdown, ISAs and GIAs, with FTIPs used to secure specific medium term goals.
- Legacy: bequests, inter generational support and estate planning, using residual pensions, property and protection, with PLAs as an option where reliable income from non pension capital is still needed.
This approach aligns well with the direction of travel on Pension IHT and Targeted Support. As rules around pension death benefits evolve, there is likely to be more scrutiny of how advisers blend pensions and non pension wrappers to achieve both income and estate objectives. Annuities, particularly Purchased Life Annuities (PLAs) and partial crystallisations into lifetime annuities, can help balance the trade offs between tax efficiency, control and certainty.
Targeted Support, if implemented well, could also act as a catalyst for more structured retirement pathways. Digital journeys that guide clients through essential vs discretionary spending, model the impact of longevity and market shocks, and introduce appropriate blends of annuities and drawdown will be increasingly valuable. Product design and planning tools will need to work hand in hand.
Product innovation and the road ahead
Ongoing high gilt rates have already triggered renewed engagement from providers, but the more important shift will be in product innovation and integration. Expect to see more flexible options around value protection, term certain features and combining guarantees with elements of participation in growth. The most useful innovations will be those that sit comfortably within a holistic strategy, making it easier to phase guarantees, coordinate across wrappers and evidence good outcomes.
Advisers who lean into these changes now, adopt digital and AI enabled tools, and reposition annuities as modular building blocks rather than one off purchases, will be well placed for the future. In a world of longer lives, volatile markets and evolving tax rules, certainty is a scarce and valuable commodity. Used intelligently, annuities can be at the heart of delivering it.
Guaranteed Income Toolkit
Fixed Term Income Plans, Lifetime Annuities and Purchased Life Annuities can be used together as a flexible toolkit, allowing advisers to secure essential income for life, stabilise the early years of retirement and unlock secure, tax‑efficient income from non‑pension capital.
|
Product |
Primary role in the plan |
How it adds value in practice |
Best suited to which bucket? |
When it is most powerful |
|---|---|---|---|---|
|
Lifetime Annuities |
Turn part of the pension pot into guaranteed income for life |
Removes longevity risk on that slice of wealth; creates a stable income floor that clients cannot outlive, reduces pressure on drawdown in later life |
Essentials |
Securing non‑negotiable costs (housing, utilities, food, core healthcare) for life, especially for clients with low tolerance for income uncertainty |
|
Fixed Term Income Plans |
Provide guaranteed income for a set term, with a known maturity value |
“Buys time” during early retirement or life transitions, manages sequencing risk by locking in 5–10 years of income, creates natural future review points |
Essentials / Lifestyle (near term) |
Bridging gaps to state pension or DB start dates, funding specific commitments (mortgage, school fees); stabilising income in the vulnerable early years |
|
Purchased Life Annuities |
Convert non‑pension capital into secure, often tax‑efficient income |
Puts surplus cash or GIA assets to work, can improve net‑of‑tax outcomes compared with interest alone, diversifies guaranteed income beyond pensions |
Essentials / Lifestyle |
When clients have built up significant non‑pension capital and want reliable, tax‑aware income without increasing pension withdrawals |
Use annuities to underpin client retirement plans
Purchased Life Annuities
Purchased Life Annuities help clients who have done their pension planning but still need predictable, tax‑aware income from non‑pension capital.
Lifetime Annuities
Build a clear income floor for essentials with Lifetime Annuities, easing pressure on drawdown portfolios.
Register for our webinar
Nick Flynn, our Sales & Distribution Director, will be joined by Efty Mateides, Proposition Development Manager at Canada Life, to explore how annuities can be integrated into sophisticated retirement strategies.
They will cover how annuities can be used to underpin essential spending, how simple frameworks can make client conversations easier and the impact of today’s gilt rates, Pension IHT discussions and wrapper choice on real client cases.