By Adam Cadle
Fixed-term annuities have become the ‘most vibrant sector’ of the retirement income market and also a key option for modern retirees looking to combine certainty with flexibility, according to Just Retirement.
The retirement specialist has seen overall quote activity for its own fixed-term annuity rise by 10 per cent each quarter and applications have risen by more than 35 per cent quarter on quarter since its launch last summer.
Just Retirement stated that unlike conventional annuities, fixed-term annuities pay an income for an agreed period of time, then at maturity return a guaranteed lump sum. In addition, clients do not have to lock into lifetime annuity returns.
Just Retirement’s group director of external affairs and customer insight Stephen Lowe commented: “Fixed-term annuities have been around for a while but it is only really in the last year they have become established as one of the four options for retirement income alongside lifetime annuities, drawdown and asset-backed annuities.
“The customer base is quite diverse. The flexibility is the key motivator, and
often the fixed-term annuity is only one part of a wider pension strategy. Some are would-be lifetime annuity buyers who don’t want to lock in to today’s low rates while others are drawdown clients, perhaps nursing losses, who are worried about investment performance risk.”