{"id":932715,"date":"2026-10-18T15:18:16","date_gmt":"2026-10-18T15:18:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/932715\/"},"modified":"2026-10-18T15:18:16","modified_gmt":"2026-10-18T15:18:16","slug":"retirees-turn-to-lesser-known-stipend-to-help-gap-between-ending-work-and-receiving-state-pension","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/932715\/","title":{"rendered":"Retirees turn to \u2018lesser-known\u2019 stipend to help gap between ending work and receiving state pension"},"content":{"rendered":"

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The sale of retirement annuities has risen sharply in recent years, as more people are looking for a way to bridge the gap between finishing work and receiving their pension. <\/a><\/p>\n

Financial advisers have reported seeing a growing interest in an annuity, which turns a person\u2019s pension into a regular, guaranteed income. <\/p>\n

While the vast majority of people opt for a lifetime annuity, which provides an income for the remainder of their life, more people are now attracted to the \u201clesser-known\u201d fixed-term annuity. <\/p>\n

Under the conditions of a fixed-term annuity, a person can give them an income for a set number of years, before receiving a lump sum at the end. <\/p>\n

Retirement specialist Standard Life<\/a> told The Guardian this could see a 62-year-old with a \u00a3100,000 pension pot would get a guaranteed income for five years, and a \u00a350,000 lump sum at the end. <\/p>\n

\"FinancialFinancial advisers are seeing a surge of interest in fixed-term annuities (PA) (PA Archive)<\/p>\n

Unlike a traditional lifetime annuity, it offers a degree of flexibility meaning the person is not locked in favour – once the set term ends, a person can re-evaluate their options. <\/p>\n

According to research, 62 is the average age when people would like to retire. <\/p>\n

As a result, a person could use a fixed-term annuity to fund the period, given that the state pension age has risen will rise to 67 in April 2028. <\/p>\n

Under the typical conditions, a fixed-term annuity is usually available from the age of 55, with a minimum investment of around \u00a310,000.<\/p>\n

Nick Flynn at Canada Life says these types of products are resonating with retirees \u201cbecause they solve real challenges, helping retirees buy time before committing to drawdown or purchasing a lifetime annuity\u201d.<\/p>\n

He adds: \u201cCustomers are choosing the product to bridge the gap to state pension<\/a> or defined benefit pension start dates, help fund specific commitments such as mortgage payments or school fees, or stabilise income in the earlier years of retirement.\u201d<\/p>\n

The announcement by Rachel Reeves in the 2024 autumn budget to change the inheritance tax treatment of pensions has seen a surge of interest in the fixed-term annuity, given that \u201cunused\u201d pension savings can be taxed after death if they exceed the IHT threshold. <\/p>\n

Unused funds are viewed as money in a pension pot that has not been used to claim an income. <\/p>\n

However, the insurer Legal & General says it surveyed 2,000 UK adults over the age of 50 earlier this year, and found a number of confusions about annuities remained \u201cwidespread\u201d.<\/p>\n

For example, only 35 per cent of respondents correctly identified a lifetime annuity as the retirement option that guaranteed an income for life. Meanwhile, 30 per cent felt that annuities were too difficult to understand.<\/p>\n

But L&G says: \u201cAnnuities are actually quite simple. They let you exchange some or all of your pension savings for a guaranteed income.\u201d<\/p>\n

However, it adds: \u201cThey are not right for everyone. Annuities generally cannot be changed once set up or cancelled after the cooling-off period.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Membership today.…\n","protected":false},"author":2,"featured_media":932716,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,186,184,185],"class_list":["post-932715","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-au","tag-australia","tag-business","tag-finance","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/932715","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=932715"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/932715\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/932716"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=932715"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=932715"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=932715"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}