Top consumer concerns around annuity purchase
Maximising income is at the forefront of annuity purchasers’ minds reveals new research from Partnership.
With significant debate around these products – which are generally designed to provide a guaranteed income for the duration of a person’s retirement - the specialist insurer asked over-55s who had taken out an annuity or intended to do so, what their biggest concerns were. The research revealed that the largest proportion of annuitants wanted to know how they could secure the best possible rate (28%) followed by those who were concerned whether their income would keep track with inflation (26%).
Top five annuity concerns
1. How can I get the best possible rate? 28%
Shop around and make sure you find out if you are eligible for an enhanced annuity. If possible, get independent financial advice.
2. Will my income keep track with inflation? 26%
Rather than taking a taking a level term product consider an escalating annuity
3. Is the annuity provider financially stable? 24%
To date no annuity provider in the UK has defaulted on an annuity payment and they are regulated by the FCA and PRA.
4. Can I trust the company/brand that provides my annuity? 13%
5. Can I get a good rate from a trusted provider? 12%
By shopping around, you can ascertain whether you are getting a good rate and then choose the provider that you trust.
With annuities providing many retirees with their steady income, 24% said they were concerned about the financial stability of their provider and 13% wanted to know if they could trust the company that provides their annuity. Brand was also important to 12% who wanted a good rate from a trusted band.
While 17% said they had no concerns about their annuity purchase, others worried about whether they understood the documents they had signed (8%) and if the annuity provider would be easy to deal with during their retirement (7%).
Andrew Megson, Managing Director of Retirement at Partnership, commented: “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.”