Almost half (45%) of over-50s have said they don’t know that annuities come in many forms and with various options, Standard Life has found.

Annuities come in many different variations and with different options which can be shaped to suit individual retirement needs, providing a level of flexibility which can be important for many retirees.

Research by Standard Life revealed that over a third (37%) of those surveyed who have annuitised or plan to do so were familiar with single life annuities, which are on the lifetime of one person and provides income for the rest of their life.

Over a quarter (26%) said they were familiar with level annuities, which pay the same yearly income from the start of retirement, regardless of inflation, with a similar figure (24%) also aware of inflation-linked annuities, which increase every year in line with an inflation index.

However, Standard Life found that only 10% of those surveyed were familiar with enhanced annuities, which provides a higher income if a person’s health or lifestyle may shorten their lifespan.

Furthermore, the group found that many over-50s are under the misapprehension that annuities will not allow them to pass on wealth to surviving relatives in the event of their death, and state that this is a key barrier to purchasing one.

Over one in 10 (13%) said they are not planning to purchase an annuity because of this reason, with over half (56%) unaware that an annuity can be set up to cover the life of a surviving partner in a joint-life annuity.

Head of annuities at Standard Life, Pete Cowell, said: "There is comfort in the income certainty provided by an annuity which is invaluable when planning for retirement. However, with so many options available, it’s vital to do your research to ensure you’re shaping your annuity purchase around your retirement needs.

"For example, if you want to ensure your surviving spouse, partner or dependants receive a regular retirement income, a joint life annuity will enable you to pass on your wealth in this way.

"Ultimately, the most suitable type of annuity is usually determined by a person’s financial goals and individual circumstances. This research suggests that many people of retirement age might overlook their options due to a lack of awareness and miss out on the peace of mind annuities can provide. Professional advice can play a crucial role here in helping people understand the true value of an annuity."

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