Interest in fixed term annuities rises as retirees look for more flexibility
More people are exploring fixed term annuities to secure a guaranteed retirement income while keeping some money aside for the future, according to new figures from Standard Life.
The retirement specialist Standard Life has reported a 15% increase in fixed term annuity quote volumes in the first half of 2026 compared with the second half of 2025. The figures echo a recent report of fixed term annuity sales doubling at Canada Life.
What is a fixed term annuity and how does it work?
Unlike a lifetime annuity, which pays you a guaranteed income for life, a fixed term annuity provides income for an agreed period.
You choose the income you want, and whether you want a guaranteed return at the end of the term (known as the guaranteed maturity value). You can use the money at maturity to buy another annuity, move into pension drawdown or make other retirement plans, depending on your circumstances.
A fixed term annuity could help you:
Bridge the gap to your State Pension if you plan to retire before you're eligible.
Fund your early retirement years with a regular, guaranteed income.
Keep future options open by retaining a maturity value for later retirement.
Combine different income sources by using it alongside drawdown, savings or your State Pension.
It's important to consider what you'll do when the term ends and whether you'll have enough income for the rest of your retirement.
How much income could a fixed term annuity provide?
Standard Life has provided examples of what a fixed term annuity could provide from a £100,000 pension pot:
Term | Annual guaranteed income | Maturity value |
|---|---|---|
5 years | £13,800 | £50,000 |
10 years | £9,100 | £50,000 |
These are illustrative figures from Standard Life, not guaranteed annuity rates for everyone. It is always worth shopping around for the best annuity rate, as rates vary between providers. Your own income and maturity value available will depend on the provider's rates and the options you choose.
Why are more people considering fixed term annuities?
You might retire before your State Pension starts, want to ease into retirement gradually or prefer a guaranteed income for a few years before reviewing your plans.
Standard Life's Retirement Voice research found that people would ideally like to retire at 62.3 years on average but don't expect to stop working until 67.6. That's a gap of more than five years, which could leave some people looking for ways to bridge the difference.
Pete Cowell, Head of Annuities at Standard Life, said: “Current rates mean some retirees can secure an income that’s higher than the full new State Pension for a set period, while retaining a maturity value for future use. For people who want guaranteed income without giving up future flexibility, that can be an attractive combination."
He also highlighted the importance of thinking ahead: "Before buying a fixed term annuity, retirees should consider how long they need the income for and what role the maturity value could play in future plans."
He added: "Retirement income doesn’t have to come from a single source. A fixed term annuity can sit alongside drawdown, savings and the State Pension, helping people combine the reassurance of guaranteed income with the opportunity to review their plans later."
Could a fixed term annuity work for you?
A fixed term annuity isn't right for everyone, but it could be worth considering if you want guaranteed income for a set period while keeping some flexibility for the future.
Income, maturity values and terms all vary between annuity providers, so it's important to compare your options.
At Retirement Line, we specialise in helping people find the right annuity for their retirement. As the UK's largest pension annuity broker*, we compare rates from leading providers to help you explore your options.
For a free, no-obligation annuity quote, try our free annuity calculator. If you’d prefer to speak with an Annuity Specialist directly, you can call us on 0800 652 1316 or email us at info@retirementline.co.uk.
