Are Annuities Back in Favour in 2025...?

After interest rates fell to rock bottom from 2008 and remained there for a sustained period, annuity incomes represented poor value for money for most and many people discounted them as part of their overall retirement income planning. More recently, as rates have recovered and remained at their current levels, the annuity market has rebounded and is currently bustling. Annuity incomes have now stabilised and are once again becoming a key part of people’s retirement strategies.

So what's the verdict?

WHAT THE RESEARCH SAYS

Research shows that a healthy someone aged 67 with pension savings of £100,000, could buy a single life annuity paying a level £7,600 per year for the rest of their life. And, if there are health issues to disclose, there could be eligibility for an enhanced annuity, meaning a higher income could be secured.

WEIGHING IT UP

It is worth considering that you do not need to use your full pension pot to buy an annuity. As an example, you could buy an annuity income with just part of the pot, perhaps enough to provide an income to cover your essential expenditure only, leaving the remaining pension pot accessible to address other income needs as and when appropriate.

It’s also important to shop around on the open market to try and achieve the most competitive annuity rate for you, rather than just accepting quotes from a single financial provider.

A WORD OF WARNING

Once you’ve bought an annuity, it’s final.

There’s no reversing the decision if you change your mind later down the line and so you must be satisfied that it is the right course of action for you.

The best way to do this is by obtaining personalised, independent financial advice.