Almost half of the UK does not know what an annuity is, research from Standard Life has found.
The ‘Changing Face of Retirement’ report, found that 48 per cent of the UK do not know what an annuity is, while women are less likely to be familiar with the concept than men.
Taking an annuity is one of the most common ways to turn a pension into an income at retirement, and the report highlights a concerning lack of understanding.
Commenting, John Lawson, head of pensions policy at Standard Life said: “Being better informed on how your pension can fund your retirement will put the customer in a stronger financial position in the long run.
“Annuities offer you security and a reliable income throughout retirement years. As people live longer, with some possibly living in retirement for 25 to 30 years, having that guaranteed income stream has obvious advantages. Therefore knowing what an annuity is, how it works and if it’s the right option for you is vitally important.”
But people should be researching their retirement income options to make sure they get the best solution for them, Lawson adds: “When it comes to other purchases, such as cars or domestic appliances, most people don’t just go out and buy the first one they come across; they research it first to understand whether it represents value for money and meets their needs. People should be taking a similar approach with their retirement income.”