Half of pension savers prioritise guaranteed income over flexibility, research reveals

Nearly half of people with defined contribution (DC) pensions prioritised a guaranteed income for life in retirement, according to data from the Department for Work and Pensions (DWP). 

The survey looked at people aged 40 to 75 and found that 46% said guaranteed income was the most important thing for their pension to provide. 

This was even higher among the youngest pre-retirees, with 58% of those aged 40 to 44 and 50% of those aged 45 to 49 prioritising guaranteed income. 

The figure also rose to 51% for those aged 70 to 75.

Only 20% prioritised flexibility, while 11% said their main focus was using their pension to bridge the gap to state pension age. 

7% preferred flexible income up to a certain age and guaranteed income after that. 

The results showed most people valued certainty, either to cover essentials or to keep money management straightforward in later life.

Demand for annuities hit a record £7bn in 2024, up 34% on the previous year, according to the Association of British Insurers. 

The number of people choosing guaranteed income products has not been this high since pension freedoms were introduced.

Stephen Lowe, group communications director at Just Group, said: “In a volatile and turbulent world, this data highlights a strong appetite for financial certainty and peace of mind in retirement. 

“Younger savers seem to be particularly attracted to guaranteed income, challenging the assumption that flexible access to pension cash through drawdown is the preferred route.

“The rise in annuity rates has increased demand for guaranteed income but there are also innovative products being introduced that blend drawdown and annuity, which is also increasing interest.”

Lowe added: “This allows people to rest easy knowing that they have sufficient income to cover their essentials and can still invest their remaining capital for growth if they choose. 

“There has never been a better time to explore guaranteed income for life given the strong rates available.

“More people are choosing to shop around and a competitive market is providing an increasing range of tailored solutions.”