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How annuities can help protect your retirement income from falling stock markets

Not looking to delay your retirement? We take a closer look at how an annuity could help protect your retirement income from falling stock markets.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

Lots of people have a personal pension (like the HL SIPP), or a workplace pension. The value of these pensions are normally directly linked to the stock market. Meaning when the stock market falls, as has happened in recent months, the value of your pension pot is likely to as well.

But it’s not all doom and gloom. The average managed pension fund is only down by about 1.6% across the last 12 months (source: Lipper IM to 25/05/20). And if you’re approaching retirement with a workplace pension, it’s likely your pension is invested in less risky assets with some of it even held as cash.

This is known as life styling, and often happens automatically as you get closer to retirement. Some pension funds which make use of these traditional de-risking strategies have even grown recently.

It’s important to remember though that past performance is not a guide to future returns. Unlike the security offered by cash, all investments and the income they produce can fall as well as rise in value so you could get back less than you invest.

No one knows what the future holds, or when the markets will recover. So for anyone approaching retirement, you’ll need to consider whether you’re comfortable keeping your pension invested.

While now could be the time to think about delaying retirement and waiting for the uncertainty to settle, for some that might not be an option they want to take.

If you’re wondering how to protect your future income from falling markets, one answer could be – buying an annuity.

This article is not personal advice, if you’re not sure which retirement option is right for you, you should ask for advice.

Ease your worries in retirement with an annuity

Annuities aren’t as popular as they used to be. But today, the perceived value of a guaranteed retirement income has shot up. After all, it’s easy to underappreciate the security they offer when markets are rising.

If, like many retirees, you’re worried about stock market ups and downs you could swap some of your pension for an annuity. In return, you’ll get a guaranteed income for the rest of your life. It doesn’t matter how long you live, or if the markets crash.

Find out more about annuities

Buying an annuity isn’t an all or nothing decision either. That’s ideal if you don’t want to lock your entire pension into an annuity in one go. Instead, you could buy more than one annuity over time. This also gives you the option to take a more flexible income as and when you need it.

Remember annuity rates change regularly and might go up or down in the future. Your quotes will be guaranteed for a limited time only and once set up annuities can’t normally be changed. As always, consider your options carefully, and if you’re not sure ask for guidance from Pension Wise or get personal advice.

Your chance to win 1 of 5 Fortnum & Mason hampers

With the great British summertime fast approaching, we’re giving away five £175 Fortnum & Mason hampers for you to enjoy. We know summer might be a little different this year, but there’s no reason you can’t enjoy a good old-fashioned picnic.

To be in with a chance of winning, simply request an annuity quote using our online annuity tool by 29 June and we’ll automatically enter you into our prize draw. Entrants must be 55 or older. Terms apply.


How much guaranteed income could you get?

The amount of annuity income you get depends on a number of different factors including; your age, the annuity features you choose, the size of your pension pot, annuity rates at the time you buy and your health and lifestyle choices.

It’s important you shop around to get the best deal out there. There are currently six annuity providers on the open market and each could offer you a different amount of secure income. And there’s no obligation to buy your annuity from your current pension provider – they might not offer you the highest income.

It’s easy to get an annuity quote. Our online annuity tool does all the hard work for you. We’ll get you quotes from all six providers in just a few minutes. You’ll know exactly how much annuity income you could get.

All you need to do is answer a few questions about you and your pension. If you also confirm details about your health and lifestyle, you could get a higher income.


Even if you’re not set on choosing an annuity, there’s nothing to lose. It’s always worth knowing how much guaranteed income you could get. It won’t cost you a penny, and it’ll help you compare your options and keep an eye on the ever-changing rates.


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Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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