Oakham-based Grayson Lewis Financial Planning work with a variety of clients across the county, all with different start points and financial goals. Their team of finance experts explain how annuities are making a come-back and could be an excellent option for those looking to gain future financial security.

For years, retirement planning in the UK has been dominated by drawdown pensions, praised for their flexibility and control. As market volatility increases and interest rates change, a quieter, more traditional option is making a comeback, the annuity. Once overlooked, annuities are now offering some of the most competitive rates in over a decade, providing a level of income security that's hard to ignore. 

What is annuity?

An annuity is a product that converts your pension savings, or even personal savings, into a guaranteed income for life or a fixed period. Unlike drawdown pensions, which rely on investment performance and market conditions, annuities offer certainty. They provide a guaranteed income, no matter how long you live or how the market behaves. 

What's the difference between drawdown and annuities?

Drawdown pensions (also known as flexi-access drawdown) remain popular for their flexibility. They allow you to manage your investments, withdraw funds when needed, and leave money behind for you beneficiaries. With that flexibility comes risk, especially during turbulent markets. Your pension pot could run dry earlier than expected if investments underperform or if withdrawals are not carefully managed. 

Annuities in contrast, provide peace of mind. You don't need to worry about managing your pot or market downturns. By buying an annuity with your retirement pot, the income is guaranteed. This makes them especially valuable for those who prioritise security and predictability in later life. 

Is now a good time to buy an annuity?

Annuity rates are closely linked to interest rates and long-term government bond yields. With current interest rates, annuity income has significantly increased. In fact, some retirees today can secure significantly more income than just a few years ago. 

Crucially, you don't have to wait until you retire to take advantage of these rates. You can purchase an annuity now using all or part of your pension or even your savings, locking in today's high rates while continuing to work or draw other income. This flexibility offers a strategic opportunity for anyone looking to help safeguard their future income.

More than just a fixed payment 

Modern annuities are not one-size-fits-all. You can tailor your annuity with several options that provide additional protection, and flexibility should it be required. 

• Joint-life annuities: Continue payments to a spouse or partner after your death. 
• Guaranteed periods: Ensure payments are made for a minimum number of years, even if you pass away early. 
• Value protection: Return any unused portion of your original investment to your estate. 
• Inflation-linked increases: Choose to have your income rise each year to keep pace with inflation. 

These features make annuities a far cry from the rigid products of the past. With the right setup, they can offer more long-term security while preserving some of the financial legacy you wish to leave behind. 

A balanced approach to retirement

Many retirees now adopt a hybrid approach. Using part of their pension or savings to buy an annuity for guaranteed income, while keeping the remainder in drawdown for growth and flexibility. This combination can provide both security and adaptability, covering essential costs with an annuity and allowing for discretionary spending or inheritance planning with the rest. 

Final thoughts

Retirement should be a time to enjoy life, annuities are for those who do not want to worry about outliving your money or second-guessing investment choices. With today's elevated annuity rates and a wide range of options, now is an ideal time to explore how annuities can fit into your retirement strategy. 

Whether you're approaching retirement or simply planning ahead, speak to one of our Financial Planners to understand how you can take advantage of today's annuity landscape, and bring certainty to your financial future. 

For an initial no obligation consultation, please feel free to get in touch with the team at Grayson Lewis through this link.

You should be aware that annuity rates can change substantially and rapidly, there is no guarantee that when you purchase an annuity the rates will be favourable. As it is not possible to change your annuity after purchase, this could mean that your pension income may be less than you had hoped for. 

When choosing how to access your pension you can also receive free impartial pensions guidance from the Pension Wise website, or you can book an appointment over the telephone 0800 011397. 

Grayson Lewis Financial Planning Ltd is an Appointed Representative of and represents only St. James's Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group's wealth management products and services, more details of which are set out on the group's website www.sjp.co.uk/products. The 'St. James's Place Partnership' and the titles 'Partner' and 'Partner Practice' are marketing terms used to describe St. James's Place representatives.

SJP Approved 09/06/2025