What is the best type of guaranteed annuity for your client?

2 September 2016

No more salary.

That is the reality for your clients at retirement. Suddenly they will be responsible for their own income, and will be faced with a bewildering range of options for income provision.

By finding out what they need most from their retirement income, you will be able to help your clients decide how best to use their retirement savings. From international research and from a survey undertaken by Just Retirement, we know that most people want a guaranteed income for the rest of their lives.

Guaranteed annuities provide that income security, giving peace of mind that regular expenditure is covered.

Meet Margaret, age 60.

Margaret was a nursing assistant about to retire, with retirement savings of R1m. She has had diabetes Type 2 for the past 11 years. Margaret’s adviser asked us to quote on three of our enhanced annuity products, and she provided her health and lifestyle information via our 20-minute underwriting phone call. Let’s see how the annuities compare:

All three products offer an enhanced guaranteed income that will help Margaret to meet her basic expenses, and each product has pros and cons for her to consider:

Inflation-linked annuities guarantee that increases will be in line with consumer price inflation. They offer the best protection against inflation, but are very expensive (and unfortunately unaffordable for most retirees).

Fixed escalation annuities protect against expected inflation but not against unexpected inflation.

With-profit annuities invest in a portfolio of growth assets that provide an increase each year. The retirement income is guaranteed never to decrease, and increases target inflation (and may be above or below).

In choosing the most appropriate product, Margaret needs to decide what is more important to her: a higher income with a targeted increase or a lower income with a guaranteed increase. Margaret should also consider this fact: even if the returns on the Just Retirement Enhanced With-Profit Annuity were 2% p.a. lower than inflation-linked returns every year over her life expectancy, she could expect to earn more over her lifetime from the Just Retirement Enhanced With-Profit Annuity than from the other two annuities.

We are proud to offer a range of guaranteed annuities that give choices to retirees, and we look forward to helping you to help your clients select the right funding solution for their retirement.

Till next time.

If you have any queries please email

We believe everyone deserves a just retirement.