Entering retirement is a time that is often defined by a high degree of vulnerability. For many retirees, the transition from the workforce triggers an identity crisis while at the same time requiring them to make arguably the most critical financial decision of their lives.  

Traditionally, the industry has presented this choice as a binary: the growth of a living annuity versus the security of a guaranteed life annuity. However, as market dynamics shift, this binary framing is increasingly insufficient. To bridge this gap, financial advisers must look toward a middle ground that balances market participation with rigorous downside protection.  

The real risks of the de-accumulation phase - Retirees today face significant threats such as longevity risk, market risk, and sequencing risk. While longevity and market risks are well-understood, sequencing risk is particularly dangerous during the de-accumulation phase.  

A market crash early in an individual’s retirement can have a significantly detrimental impact. Two retirees with the same average returns can have vastly different outcomes based solely on when a market downturn occurs. In a traditional living annuity, there is no protection against this; a high drawdown rate combined with poor early performance can rapidly deplete a retiree's savings.  

Another big risk is emotional decision-making. During a market downturn, the human instinct is to do something, such as switching from equities into cash. This often results in crystallising losses at the worst possible time - a mistake that is difficult to recover from in later life.  

The middle ground - With-Profit Annuities (WPAs), such as Momentum Corporate’s Life Horizon range, offer a practical solution to this planning gap. They act as the only guaranteed annuity that provides market exposure while maintaining safety guardrails. Retirees benefit from market upside when things go well, but the insurer takes on the longevity risk, ensuring the money never runs out.  

How WPAs work - The security of a WPA is driven by three core mechanisms: smoothing, irrevocable increases, and a guarantee that the pension can never reduce.  

Investment returns are typically smoothed over a six-year period. This staggered approach ensures that increases remain stable even during short-term market volatility.

Once a bonus is declared and an increase is granted, it is locked in and irrevocable.