Almost half of over 50s don’t know that annuities come in many forms and with various options, according to research from Standard Life, part of Phoenix Group.

The study suggested widespread ignorance about annuities among older people.

When those who had already annuitised, or planned to do so, were asked about different annuity options, there was limited familiarity with the options available:

• Just over a third (37%) are familiar with single life annuities.
• Only a quarter (26%) are familiar with level annuities.
• Just a quarter (24%) are familiar with inflation-linked annuities.
• Only 10% of over 50s are aware of enhanced annuities.
• Just 10% are aware of value/capital protection.

Many over 50s mistakenly believe that annuities will not allow them to pass on wealth to surviving relatives in the event of their death, and state this as a key barrier to purchasing one.

One in ten (13%) are not planning to purchase an annuity because of this reason, with more than half (56%) of all over 50s unaware that an annuity can be set up to cover the life of a surviving partner.  

That is also reflected among those over 50s who have already bought an annuity, or are considering doing so, with just a quarter (27%) familiar with joint life annuities. Furthermore, only one in five (20%) are familiar with the term “guarantee period”.

Pete Cowell, head of annuities at Standard Life, said: “Ultimately, the most suitable type of annuity is usually determined by a person’s financial goals and individual circumstances. The 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. Professional advice can play a crucial role here in helping people understand the true value of an annuity.”

Annuity rates have strengthened significantly over the last two years and the latest Standard Life Annuity Rate Tracker found that rates for a healthy 65-year-old reached 7.25% in September 2023.

• The research was commissioned by Standard Life and conducted by Opinium, with a nationally representative sample of 2,000 over 50 years old, between 6^th- 14^th March 2023.