There is a widespread lack of awareness around annuities, says Standard Life, with almost half (45%) of consumers unaware that annuities come in many forms.
According to research by Standard Life, just over a third (37%) are familiar with single life annuities and only a quarter (26%) are familiar with level annuities, while 24% know what inflation-linked annuities.
The findings also showed that only 10% of over-50s are aware of enhanced annuities, which can provide a higher income if a person’s health or lifestyle may shorten their lifespan.
Furthermore, more than half (56%) of over-50s are under the misapprehension that annuities will not allow them to pass on wealth to surviving relatives in the event of the death, with 13% choosing not to purchase an annuity for this reason.
This trend was also reflected among those over-50s with an annuity, or considering buying one. Only just over a quarter (27%) of this cohort are familiar with joint annuities and just one in five understand what the term “guaranteed period” means.
Pete Cowell, head of annuities at Standard Life, said: “There is comfort in the income certainty provided by an annuity which is invaluable when planning for retirement. However, with so many options available, it’s vital to do your research to ensure you’re shaping your annuity purchase around your retirement needs.
“Ultimately, the most suitable type of annuity is usually determined by a person’s financial goals and individual circumstances. This research suggests that many people of retirement age might overlook their options due to a lack of awareness and miss out on the peace of mind annuities can provide.”
