TARGETED SUPPORT AND ANNUITY SALES?

I do think tax changes and targeted support could push annuity sales higher, but the bigger driver is confidence. For years, annuities were treated as the boring option after pension freedoms. Now, with better rates and more people worrying about making their pension last, guaranteed income is starting to look attractive.
Tax can change behaviour, especially with unused pension pots set to fall into the inheritance tax net from April 2027. That may encourage clients to think differently about using their pension for income during life rather than simply preserving it for beneficiaries.
Targeted support could also be powerful, because many people do not need a lecture on every retirement option; they need a clear nudge that says: based on people in similar circumstances, you should at least consider secure income. But annuities are not one-size-fits-all. Once bought, flexibility is limited, so advice still matters. Used properly, they can give retirees something valuable: certainty.

A lot of this comes down to education and explanation. Once clients understand the range of uses annuities can have, rather than seeing them as outdated products, I think we are likely to see a significant increase in demand over the coming years.

It is important to dispel the myth that annuities are the “old way” of retirement planning. They are simply another tool in the retirement toolkit and, for the right client, can be extremely valuable.

Annuities are also not just for life. Fixed-term annuities can help bridge an income gap, for example between retirement and State Pension age, while preserving future flexibility.

The proposed inheritance tax changes could drive further interest. Some clients may choose higher guaranteed income and then pass on surplus income using the often-overlooked “gifting out of surplus income” exemption.