The Return of Purchased Life Annuities

The return of the Purchased Life Annuity: Tackling “Financial Constipation” in Retirement

For many years, annuities were widely viewed as outdated retirement products. With interest rates at historic lows and the introduction of Pension Freedoms in 2015, locking money away in exchange for guaranteed income felt restrictive to many retirees.

However, the retirement income landscape in the UK is changing again. In 2026, higher interest rates and ongoing market uncertainty mean that annuities — particularly Purchased Life Annuities (PLAs) — are increasingly being reconsidered as part of retirement planning.

While PLAs have traditionally been associated with cautious savers who value certainty, they are now also being explored by retirees who want to enjoy their wealth but remain concerned about the risk of running out of money later in life.

What is a Purchased Life Annuity?

A Purchased Life Annuity (PLA) is a guaranteed income product bought using non-pension funds. This could include:
• Savings or investments
• Inheritance money
• Proceeds from selling property or other assets

Unlike a pension annuity, which is purchased using pension savings, a PLA is funded using personal capital outside of a pension wrapper.
In return for a lump sum payment, the provider pays a guaranteed income for life or for a set period, depending on the product structure.
For some retirees, this type of guaranteed income can form a stable financial foundation, helping to cover essential living costs such as utilities, food, and council tax.