An estimated 19 million people aged over the age of 50 may be overlooking a pension option that could guarantee a regular retirement income, research by the Financial Services Compensation Scheme (FSCS) has found.

Only one in 10 people over the age of 50 said that they would be willing to take risks with their money, showing that there is a low-risk appetite amongst UK adults when it comes to money.

The research points to a mismatch amongst the 26.5 million over-50s in the UK regarding their wants and how they behave. Although most of the group consider themselves to be risk averse, the majority will not consider a pension option that could offer the security of a regular incomes over a set period.

However, the survey found that less than one third (28%) either have an annuity or would consider buying out.

The survey found that despite over one third (37%) of respondents who are unwilling to take risks as they are worried about not having enough money to last the duration of their retirement, more than half (58%) of the same group admit they have little to no understanding of annuities.

Furthermore, only 29% agreed that improved annuities rates would make the product more attractive to them, with another 29% not knowing if annuities are right for them. A further 29% were worried that their provider would go bust, and 25% said that there is a lack of protection in case something goes wrong.

Annuities that are provided by UK-regulated insurers by the FSCS, so the scheme can pay compensation to eligible customers with no upper limit, should the provider go bust.

With this in mind, 83% of survey respondents said the product would be more attractive, knowing that it is FSCS protected. Certainty of income (73%) and being less risky than other products (36%) were also listed an interest in an annuity.

Chief communications officer at FSCS, Lila Pleban, said: “It is not surprising that most UK adults aged 50+ are risk averse when it comes to their money. At this stage of people’s lives, they are likely to choose safety and stability over volatility and uncertainty. However, what is surprising is that many people are not willing to even consider an annuity because they don’t fully understand what it is.

“There are pros and cons to every option out there for your pension pot, whether you choose a guaranteed income or a more flexible drawdown approach, and retirement choices are very personal. Accessing regulated financial advice or free and impartial guidance from services such as MoneyHelper may help people to better understand the money and pension choices available to them.

“It is clear from our latest research that those aged 50 and over must have access to the knowledge and tools they need so they can choose the right retirement product for them. That’s why at FSCS we are committed to empowering and educating consumers, so they feel confident about the decisions they make when it comes to their money.”

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