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Concerns about annuities

Concerns about annuities

Category: Annuities

Updated: 12/02/2014
First Published: 12/02/2014

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

"Shop around" is the most common piece of advice given to answer people's concerns about annuities, with maximising income being a top priority.

Annuities are products that you buy when you retire, designed to provide a guaranteed income for the rest of your life, and once bought you're locked in for life - so no wonder people worry about getting the best deals.

In fact, 28% of over-55s who have taken out an annuity, or are intending to do so, are concerned about getting the best possible rate, according to research from Partnership.

With inflation cutting into people's savings, 26% of those surveyed also told of apprehension about their annuity income keeping track with general price rises.

Whether the provider is financially stable was a worry of just under a quarter of people (24%), while brand confidence was also an important factor, with 13% concerned whether they can trust the brand and 12% wanting to get a good rate from a trusted brand.

Understanding documents was a fear of around 8% and choosing a provider who was easy to deal with was on 7% of people's minds, but happily around 17% did not have any worries at all.

Shopping around, getting independent financial advice and comparing rates, terms and brands are all potential solutions offered to allay people's concerns.

"The list of the top five concerns that consumers have when purchasing an annuity is a useful indication of where greater education and information is needed to ensure that consumers do not let their fears get the better of them, "Richard Eagling, Head of Pensions at Moneyfacts commented: "The large number of consumers who worry about whether they can trust a particular annuity company is significant as there is a real danger that they may overlook less familiar brands or companies that could offer a higher retirement income. This may explain why so few consumers still shop around for the best annuity, preferring to stick with the pension company that they are more familiar with."

What Next?

Increase your income in retirement by up to 40% - Take a look at Moneyfacts' online annuity planner

Read our annuity guide on 'How to get the most from your annuity'

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

 
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