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Pensions provider LV said it has seen a significant increase in enquiries from advisers looking for fixed-term annuities for their clients in order to secure a basic income on the back of the ongoing coronavirus crisis.

According to the provider, application volumes have more than doubled over the last month compared with the monthly average seen over the previous three months, as stock market volatility, caused by Covid-19, frightened retirees.

In February LV received 41 applications with an annual premium equivalent of £287,000, but in March this increased by nearly threefold (173 per cent) to 112 applications with an annual premium equivalent of £979,000.

Clive Bolton, managing director of savings and retirement at LV, said this was due to many retirees seeking a level of certainty with their retirement income over a specific term, while they wait for the market to recover.

Mr Bolton said: “Fixed-term annuities are a way for customers to receive a guaranteed level of income/maturity value but retain some flexibility.

“This makes them a useful option for those risk-averse customers that are looking to secure a bedrock level of income to cover them during a period of extreme volatility. They might want to look at this for part of their funds and use the rest to provide growth, or they may just want the certainty over a specific term while they see what happens over the coming years recovery.”

A fixed-term annuity provides a regular retirement income for a number of years – often five or 10 – as well as a ‘maturity amount’ at the end of the specified period.

Savers can then use the maturity amount to invest in another retirement income product, such as another fixed-term annuity or a lifetime annuity, or they can take money out of their pension.

According to LV, this product is particularly aimed at cautious retirees who are looking to ‘pause’ the big decisions and take a secure/guaranteed option because they are not comfortable with the risk of investing in stock market-based funds until the current market situation calms down.

To speak to an adviser, contact us on 0191 384 1008.