UK sees growing demand for help bridging gap between end of work and start of pension
Fixed-term annuities give income for a set period – such as five or 10 years – and an agreed lump sum at the end Financial firms are reporting growing demand for a product that hel
By The Guardian
Financial firms are reporting increased interest in fixed-term annuities, a retirement product designed to provide income for a set period before paying an agreed lump sum.
The product is being considered by people who stop work before they begin receiving their main pension income. Terms can commonly run for five or 10 years, allowing policyholders to receive regular payments during the gap before a later retirement decision.
At the end of the agreed term, the annuity pays a predetermined maturity value. This gives savers a clearer picture of the money available when the arrangement finishes, while avoiding a commitment to a lifetime annuity from the outset.
Standard Life reported a 15% rise in fixed-term annuity quotes during the first half of 2026 compared with the previous six months. The company said the figures reflected growing interest in guaranteed income combined with flexibility over future pension choices.
Fixed-term annuities are one of several options available to people accessing defined-contribution pension savings. Other choices include drawdown, a conventional lifetime annuity, or a combination of approaches.
The product does not necessarily require a person to use their entire pension pot. A saver may retain part of the fund for other retirement needs, although the suitability of any arrangement depends on individual circumstances and the terms offered.
Financial advisers have described fixed-term annuities as a less familiar option within the retirement market. Anyone considering one should check the income, maturity value, tax treatment and conditions before making a decision.