Maximising income is at the forefront of annuity purchasers’ minds, closely followed by whether their income would keep track with inflation, new research has revealed.
Research undertaken by Opinionmatters among over 2,000 over-55s on behalf of Partnership found that 28 per cent of annuitants wanted to know how they could secure the best possible rate, followed by 26 per cent who were concerned with ensuring income would keep track with inflation.
With annuities providing many retirees with their steady income, 24 per cent said they were concerned about the financial stability of their provider and 13 per cent wanted to know if they could trust the company that provides their annuity. Brand was also important to 12 per cent.
While 17 per cent said they had no concerns about their annuity purchase, 8 per cent worried about whether they understood the documents they had signed and if the annuity provider would be easy to deal with during their retirement (7 per cent).
Andrew Megson, managing director of retirement at Partnership, said: “Choosing an annuity generally means trusting a company to provide you with an income for the rest of your life so it is natural that people will have some reservations around this purchase.
“However, this research reveals that the top concerns are actually relatively easy to address with additional information and ideally access to financial advice.
“While it may be natural for someone to look for a brand that they are familiar with or trust, they do need to ensure that they are not being penalised for this. If is far better to take the time and shop around to ensure that you get a good deal rather than assume that you will get this because you know who they are.”
In August 2013, the Financial Conduct Authority labelled further work into the annuity market as “complex but necessary” as it stepped up its review into annuities consumer outcomes, citing “weaknesses” in the Association of British Insurers’ self-regulated code of conduct.
The findings of the FCA thematic review are set to be published on Friday (14 February).
The FCA said the ABI code had widespread support, but that many had argued it does not go far enough and does not cover the whole market. The regulator said it will monitor the ABI’s work to assess whether it meets consumer needs.
