Understanding of annuities has risen among the over-50s, according to new research from Standard Life.
More than two-thirds (67%) of over-50s correctly identified that annuities provide a guaranteed income for life, compared to 49% in 2024.
Awareness of key annuity features is also improving. The number of respondents who recognised that some annuities can increase in line with inflation jumped from 20% to 25%, while 40% are aware annuities carry no investment risk, up from 34% in 2024.
In addition, Standard Life said the number of over-50s who understand they do not need to use their full pension pot to purchase an annuity has risen from 31% in 2024 to 37% in 2025, while those who recognise that annuities can be used alongside drawdown has increased from 30% to 35%.
Similarly, awareness that an annuity can provide an income over a spouse’s lifetime has also increased from 30% in 2024 to 38% in 2025.
Pete Cowell, head of annuities at Standard Life, said: “More people approaching retirement now understand what annuities do best: provide a guaranteed income they can rely on. With cost‑of‑living pressures still front of mind, it’s encouraging to see growing awareness of inflation-linked options and how these can protect your income over time. This is reflected in the latest industry data which shows sales of escalating annuities up 10% in 2025.”
However, Standard Life said there are still aspects of annuities that remain misunderstood such as the impact of health conditions on rates. While many assume that health issues make insurance products more expensive, the retirement specialist pointed out that enhanced annuities can offer higher income to those with certain medical conditions or shorter life expectancy.
Standard Life’s internal analysis shows customers could receive around 9% more income through underwriting, yet just a fifth (22%) of over-50s are aware of this.
Cowell added: “Demand for annuities has continued to grow as more people balance flexibility with the comfort of guaranteed income. We’re also seeing some customers use annuities as part of broader estate planning.
“However, many people still value flexibility, and our findings show that a significant proportion of those nearing State Pension age feel under‑prepared for the decisions ahead. This lack of confidence increases the risk of people drawing down savings too quickly or missing out on options that could provide greater stability later in life.
“As the retirement landscape continues to evolve, clear and accessible information about the role annuities can play will be essential to helping them make better decisions and achieve lasting financial security.”
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