The impact of demographic shifts on annuity demand

24 Apr 2025

The ageing population in the UK is driving increased demand for annuities. As people are living longer, more retirees are seeking stable income sources to make sure they have financial security throughout their retirement years. 

This trend presents significant opportunities for advisers to help clients manage longevity risk and secure their essential spending.

What should advisers be aware of?

Utilising annuities for essential spending

  • Fixed term annuities: As an adviser you can recommend fixed term annuities to cover essential expenses such as housing, healthcare, and daily living costs. This strategy will make sure clients have a guaranteed income stream for a specified period, which should reduce the risk of outliving their savings.
  • Immediate annuities: These can provide clients with a lifetime income, helping to de-risk their retirement portfolio. Essential expenses will be covered regardless of market fluctuations.

De-risking advice

  • Longevity risk management: By annuitising essential spending, you can help to protect your clients from the longevity risk of outliving their assets. This approach provides peace of mind and financial stability.
  • Inflation protection: You can recommend inflation-adjusted annuities to make sure that your clients’ income keeps pace with rising costs, safeguarding their purchasing power over time.

Strategies for advisers

  • Client education: Talk to them about the benefits of annuities and how they can be integrated into their retirement plans to provide stable, predictable income.
  • Personalised advice: Tailor annuity recommendations based on individual client needs, considering factors such as health, life expectancy, and financial goals.
  • Regular reviews: Conduct regular reviews of clients' retirement plans to adjust annuity strategies as needed. This will help to stay aligned with changing circumstances and market conditions.

By focusing on these strategies, you can effectively utilise annuities to enhance your clients' financial security and mitigate risks associated with retirement planning.