Nearly one million (990,000) pre-retirees aged over 55 are considering annuities for the first time in preparation for their retirement, research from Legal & General Retail has revealed.

The research detailed that 16 per cent (990,000) of people approaching retirement but still working were looking at the product due to improved rates against the background of rising living costs.

It found that s further 14 per cent (828,000) of working over-55s had always planned to purchase an annuity in retirement.

Legal & General also detailed other reasons as to why savers might be drawn to annuities, such as the improvement in rates (identified by 18 per cent of savers), the stability of a guaranteed income making it easier to plan their finances (78 per cent), and the assurances the product offered in a volatile market (36 per cent).

However, the research warned that a lack of awareness around annuities still remained as, of the one in five pre-retirees who stated that they wouldn’t consider an annuity, 16 per cent said it was because they believe they offered a bad deal.

An additional two out of five pre-retirees (44 per cent) described wanting a guaranteed income for the rest of their lives, but only half that number want, or are considering, an annuity.

Legal & General managing director of retail retirement, Lorna Shah, commented: “Despite annuities becoming more popular, we still need more awareness of the flexibility of fixed-term annuities and the benefits of enhanced annuities.

“Our research shows there’s still a lack of understanding about what an annuity is and what it can offer. This means people risk having an 'either, or' approach to funding their retirement, when in fact a blended approach might be more suitable.

“It’s important people are aware of all the options they have and whether a combination of these may present the best outcome. Having this knowledge will ensure people can reclaim their retirement at a time when they might be feeling lost due to financial pressures outside of their control.”

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