There is a growing consumer interest in annuities as a source of secure retirement income, according to new research from LV=.
Almost half of UK adults (43%) say certainty is the most important factor when planning their retirement income, rising to over 50% among those aged 60 and over.
While flexibility (31%) and growth (27%) remain relevant, the data suggests a clear preference for stability.
Annuities, whether fixed term or lifetime, offer guaranteed income during retirement.
A fixed term annuity provides income for a set period, while a lifetime annuity pays out for the rest of a person’s life.
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Despite the benefits annuities can offer, only one in ten Baby Boomers (aged 61–70) have considered purchasing a lifetime annuity, compared to just 8% of Generation X (aged 45–60).
Moreover, just 6% of both generations have considered purchasing a fixed term annuity. This highlights a potential knowledge gap among those closest to or already in retirement.
The findings, unveiled in LV’s Wealth and Wellbeing research, also found that more than two in five (44%) UK adults feel positively about using part of their pension to buy an annuity.
Among those who have received financial advice, this figure more than doubles compared to those who haven’t spoken to an adviser (56% vs 26%, respectively), reinforcing the value of professional guidance.
While only 38% of UK adults say they’ve considered options for their retirement income, both lifetime (13%) and fixed term annuities (9%) emerged as notable choices.
Although lifetime annuities remain more familiar, fixed term annuities are gaining traction due to their flexibility and ability to be tailored to individual retirement needs.
Depending on the provider, some fixed term annuities also offer built-in guarantees, enhancing their appeal for those seeking both control and security.
This year, LV= launched the first fixed term annuity product in the market to offer members a share in business success with all new customers becoming eligible for a mutual bonus award after 12 months.
LV= is also supporting National Annuity Day today (21 October), a new industry initiative to raise awareness of annuities and their evolving role in retirement planning.
Gwen Haggo, LV= savings and retirement sales director, said: “Annuities are regaining relevance as retirees seek certainty in an unpredictable market.
“Our research shows that guaranteed income is increasingly valued, and annuities, whether fixed term or lifetime, can offer that stability.
“Yet, awareness remains low, which is why education and advice are more important than ever in helping people make confident, informed retirement decisions. Advisers are uniquely positioned to deliver this guidance and bridge the knowledge gap.
“Our top priority is to help people live financially confident lives. That’s why we’re proud to support National Annuity Day, to raise awareness of the security and peace of mind a steady retirement income can provide.”
Steve Butler, CEO of Pension Potential said: “Many people approaching their retirement fear their savings won’t last. National Annuity Day brings the industry together to provide clear, reliable information and promote financial confidence.
“Thank you to LV= for supporting this initiative and helping more people understand the value of guaranteed income in retirement.”
