 introduced in 2015, drawdown quickly became the preferred option for many retirees. Flexibility, investment growth and control over withdrawals were seen as more attractive than converting 

Retirement Outcomes Review Final report

More recently, however, the conversation has begun to shift. Higher 

 and longer retirements are prompting many individuals to reconsider the value of guaranteed income. In this context, annuities are gradually returning to the retirement planning discussion, particularly among those seeking greater certainty alongside investment flexibility.

, explains, the renewed interest reflects a broader change in priorities. “Market volatility can be uncomfortable,” she says. “We’ve had a fair amount of political uncertainty and more global uncertainty in recent years, and those factors can often make clients want some security and guarantees for aspects of their lifetime.”

At its simplest, an annuity converts pension savings into a guaranteed income, typically paid for the rest of an individual’s life. The income is usually provided by an insurance company in exchange for some or all of a pension pot.

The appeal lies in certainty. Unlike drawdown portfolios, which remain exposed to market movements, an annuity provides a predictable income stream regardless of 

 performance. For retirees concerned about 

 or market volatility, that stability can be valuable.

However, the suitability of annuities depends heavily on the individual. “It differs largely from client to client and depends on their own personal circumstances and preferences and what’s important to them,” Ward explains.

For some retirees, particularly those uncomfortable with ongoing exposure to markets, guaranteed income can provide reassurance that essential spending will be covered.

Several factors are contributing to the renewed interest in annuities.

The first is the interest rate environment. For many years, low interest rates suppressed annuity income levels, making them comparatively unattractive. As rates have increased, annuity providers have been able to offer more generous pay outs, improving their relative appeal.

Economic uncertainty has also played a role. Political developments, global instability and volatile markets can make the prospect of guaranteed income more attractive for retirees who want greater predictability in later life.

Changes in pension legislation and the treatment of larger pension pots have also prompted some individuals to reconsider how their retirement income is structured. In many cases, this has led to renewed interest in strategies that combine flexibility with elements of guaranteed income 

UK annuities on track for best sales in a decade

Despite the renewed attention, annuities are rarely viewed as a complete replacement for drawdown.

Instead, advisers increasingly position them as one component of a broader retirement income strategy. Some retirees may use part of their pension to secure a guaranteed income covering essential expenses, while leaving the remainder invested for growth and discretionary spending 

The benefits of a blended approach to annuities and drawdown

Ward emphasises that retirement planning is rarely an all-or-nothing decision. “It’s definitely not an all or nothing discussion,” she says. “Our role as advisers is to help clients navigate what their options are and how they can use them to help meet their goals and objectives.”

In practice, many retirees adopt a blended approach. “Clients may still want some investment and drawdown as part of their retirement, but also want some certainty as well,” Ward adds.

This balance allows retirees to secure stability for core living costs while retaining the flexibility of invested assets 

Retirement income advice thematic review

Another reason annuities are returning to the discussion is that retirement itself is rarely static.

Financial priorities often evolve over time. In the early years of retirement, individuals may prioritise flexibility, travel and higher discretionary spending. Later in life, certainty and simplicity can become more important.

Ward notes that what is appropriate at one stage of retirement may change later on. “Objectives and goals throughout retirement might change,” she explains. “Investments and pension drawdown might have been suitable for one phase, but an annuity might become more attractive at a different stage of someone’s life.”

This evolving perspective means annuity decisions are increasingly viewed as part of an ongoing planning process rather than a one-time choice made at the point of retirement 

Annuity sales hit post-freedoms high, but drawdown prevails

Despite their benefits, annuities involve important trade-offs that need to be understood before committing.

The most significant is the loss of flexibility. Once purchased, an annuity typically cannot be reversed, and the capital used to buy it is no longer accessible. For individuals who value control over their assets or wish to retain capital for future needs or 

, this lack of flexibility can be a meaningful drawback.

There is also the question of timing and 

. Annuity income depends on prevailing rates at the time of purchase, meaning individuals must decide when to lock in guaranteed income 

The Pros and Cons of Annuities

For this reason, advisers often encourage retirees to consider annuities within a broader framework of income planning, rather than treating them as a single definitive decision.

Annuities are unlikely to replace drawdown as the dominant retirement income strategy. The flexibility introduced by pension freedoms remains highly valued, particularly among individuals with larger pension pots.

However, the current environment has highlighted the importance of balancing flexibility with certainty. Guaranteed income can provide stability in an otherwise uncertain financial landscape, particularly as retirements continue to lengthen.

Rather than representing a return to old models of retirement planning, the renewed interest in annuities reflects a more nuanced approach. For many retirees, the objective is no longer choosing between flexibility and certainty, but finding the right combination of both.

In that sense, annuities may not be staging a full comeback. But they are quietly reclaiming a place within the modern retirement planning toolkit.

Annuities are regaining relevance in retirement planning:

 Higher interest rates and market volatility are driving renewed demand for annuities UK as a source of guaranteed retirement income.

Guaranteed income can help reduce retirement anxieties:

 Annuities can provide stable, lifelong income, helping retirees manage longevity risk and reduce reliance on volatile pension drawdown portfolios.

Blended strategies are becoming more common:

 Combining annuities with pension drawdown allows retirees to balance secure income with investment flexibility and long-term growth potential.

Suitability depends on personal circumstances:

 The decision to buy an annuity depends on individual risk tolerance, income needs and broader retirement planning objectives.

 While they offer certainty, annuities reduce flexibility and access to capital, making timing and overall retirement income strategy critical.

Are Annuities Making a Comeback? Why Retirees Are Taking Another Look

Charlotte's role as a Chartered Financial Planner centres around providing personalized service. She prioritises understanding client's unique needs and tailoring investment portfolios accordingly. This involves frequent communication and in-person meetings to ensure alignment with client objectives. Her commitment is to help you plan for the future, whether it's retirement, reducing inheritance tax, or managing investments, fostering long-term security and peace of mind.

Chartered Financial Planner

Charlotte Ward

As a wealth manager, Quilter Cheviot utilises its expertise in both Investment Management and Financial Planning to deliver a comprehensive and holistic service. This allows them to create bespoke financial plans and investment portfolios specifically designed to meet clients’ individual needs.

Quilter Cheviot’s Investment Managers have been trusted to help grow and preserve clients’ wealth for over 250 years. Their heritage dates back to 1771, and they have offices in several regions in the UK, in Dublin, Dubai and Jersey.

Quilter Private Client Advisers treats every financial journey as unique. They have a dedicated team focused on delivering a truly personalised service, always holding clients' interests at heart. They follow a holistic approach that enables them to develop a lifelong financial plan for clients, based on individual finances and aspirations. They offer a wide range of advice including, but not limited to, first home purchases, considerations around retirement and passing on wealth. 

Quilter Private Client Advisers also works alongside both Quilter Cheviot, its sister company and award-winning discretionary fund management firm, and many professionals involved in managing clients' financial affairs, to help them deliver a comprehensive service. 

Quilter Cheviot is one of the largest discretionary investment management firms across the UK, Ireland and Channel Islands, managing bespoke investment portfolios for individuals and families for generations. Quilter Cheviot has over 36,000 clients and £25.9 billion of AUM (as at 31 March 2023).

Each client is assigned an experienced, dedicated Investment Manager who will create and manage their investment portfolio to help them achieve their own specific goals at every life stage. Their investment Managers have an average of over 16 years’ industry experience, with over 10 years at Quilter Cheviot.

Quilter Cheviot's Investment Managers are supported by one of the largest in-house research teams in the discretionary industry, consisting of 22 analysts covering equity, fixed interest and collective (fund).

Quilter Cheviot

Poppy's primary role is the management of private client, trust and pension portfolios working with both intermediaries and direct clients. She tries to build long term relationships with her clients and their advisers with the aim to provide excellent service.

Poppy joined Quilter Cheviot in 2020 having spent over 13 years at Brooks Macdonald. Poppy joined Brooks Macdonald in 2006 where she had various roles, latterly as an Investment Director.

Investment director

As a discretionary investment manager, Andrew helps clients on their journey towards achieving their financial goals. He works closely with individuals, families, business owners, trustees, intermediaries, and pension schemes. Andrew enjoys finding out what is important to them and helping them understand, often complex, investment matters in a clear and simple way.

He has over 20 years’ experience in the investment industry. Prior to joining Quilter Cheviot in 2021, Andrew worked at Brewin Dolphin, as an investment manager, and Barclays Wealth where he led the national UK Equities Committee.

Investment Manager

Nigel's primary role is managing portfolios for private clients, pension funds, companies, and charities, ensuring that his clients’ get the best service Quilter Cheviot can offer, guiding them through investment choices that occur during their lifetime.

Having commenced his investment management career with Adams & Remers solicitors in Sussex, he gained significant experience at Berry Asset Management (latterly Bordier & Cie) before helping to set-up Quartet Capital Partners in 2010, where he was Partner. Nigel joined Quilter Cheviot in early 2013.

He's proud to have made the PAM top 40 under 40 list two years in a row. This programme is established as a guide to rising stars in the private banking and private asset management sectors.

Charlotte Ward

Bio

Articles from author

Are Annuities Making a Comeback? Why Retirees Are Taking Another Look

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Financial well-being

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Charlotte Ward

Bio

Articles from author

Are Annuities Making a Comeback? Why Retirees Are Taking Another Look

Start your journey to your Financial well-being

FIND OUT MORE

LEGAL

CONTACT US

Start your journey to your
Financial well-being