In the light of significant debate around annuities, Partnership, the specialist insurer, has commissioned research asking the over 55s what their primary concerns are regarding annuities.
Perhaps unsurprisingly, the leading concern (28%) was the best way to get the highest rate of return.
To get the best rate Partnership advocates browsing the market thoroughly, and to be sure to find out whether or not one is eligible for an enhanced annuity. Getting professional financial advice is also preferable.
Inflation was another key concern, with over a quarter (26%) worrying whether or not annuity income would keep pace with inflation.
A potential solution to this is to take out an escalating annuity, rather than a level term product. However, it is worth considering that escalating annuities can start off with a lower initial payout so the numbers involved should be considered carefully before making a decision.
Those worried about financial stability of annuity providers (24%) can be reassured that none have defaulted on an annuity payment.
One in six (17%) expressed confidence in their annuity purchase, but 8% worried whether they would understand the documents involved, and 7% were concerned about how easy the annuity provider would be to deal with in retirement.
Partnership Managing Director of Retirement Andrew Megson said that it was natural for people to have some reservations about buying an annuity, which involves trusting a company to provide an income for the rest of one’s life.
Megson added that the research revealed the most common concerns were relatively easy to address, and advised people to take their time and shop around.