26 March 2019

A guaranteed income with flexibility?

The gap between clients choosing a guaranteed income or a flexible income is closing1. This could mean that clients’ considerations are broadening as they realise that their retirement needs are no longer met with a single product solution.

A guarantee or flexibility?

Cliff-edge decisions.

Investment uncertainty.


The challenge for an adviser.

These are some of the concepts that we expect clients to think about when deciding how to shape their retirement income. Often there are no right or wrong answers at the time of the decision, yet time and hindsight can help clarify which of these questions were considered.

In research we carried out in 2018, 77% of respondents said they didn’t want to take risks with their retirement savings, even if a higher return is promised. They also said the most important thing for them in retirement was financial security (52%), followed by a guaranteed income (29%) and the flexibility to drawdown on retirement funds (8%).

So how can an adviser address these needs?

In today’s retirement space where there is no single right answer, how can advisers help their clients achieve financial security while adapting to shifting requirements and goals in retirement?

A potential solution

One solution could be with a fixed term annuity, which gives a client a guaranteed income for a chosen period of time. Some fixed term annuities also provide a guaranteed maturity value for clients to use as they wish at the end of the term.

This solution can provide a flexible approach to long-term retirement planning, as your clients can delay making a decision on to how to use all of their pension savings. This could be either when they can better understand how they want to use their savings for the rest of their retirement, or when their circumstances and health may mean that they qualify for an enhanced annuity and the greater income that provides.

But this approach still ‘ties-up’ the money for the term of the plan, so what can a client do when life’s path takes an unforeseen turn for which they need access to their savings? Where is the flexibility to access their money?

Flexibility to access their money

Our Fixed Term Retirement Plan has a withdrawal feature that allows clients to take up to three lump sums from their retirement savings if they have chosen a guaranteed minimum payment period for the full plan term. This can help them deal with the unplanned and unforeseen. The withdrawal will be taken from the future maturity value, which ensures that the client’s income remains unaffected.

The withdrawal feature could help clients make their retirement decisions with confidence, knowing that if the unexpected happens they can still access their money.

Our Fixed Term Retirement plan can provide advisers with an option for their client that balances the need for financial security, no investment risk and a guaranteed income that allows clients to access their money if they need to.

Read our article to find out more about how fixed term annuities can take a role in flexible retirement planning.

Fixed term annuities – for the unforeseeable future 

Find out more about our fixed term annuity products.

View - Fixed term annuities 

Important information

Your client will have the option to take up to three withdrawals from the full maturity value if they have selected the guaranteed minimum payment period for the full term. This can be done at any time during the term of the plan, and must be a minimum withdrawal of £5,000 each time (income tax will be deducted). We’ll calculate the impact this has on their maturity value. The value of the underlying assets and interest rates at the time will affect this calculation. We’ll also deduct our administration and dealing costs.    

Fixed term annuities do not pay an income for life.

1eValue Pensions Freedom Index Report April 2018