Nearly a third (30 per cent) of UK adults aged 50 and over find annuities too difficult to understand, according to research from L&G, which has launched a new guide to tackle common misconceptions about retirement income.

The research also identified confusion around when annuities can be purchased, the income they provide and what happens to benefits after death.

Indeed, only 35 per cent of respondents correctly identified a lifetime annuity as an option that can provide a guaranteed income for life.

The research also found that one in five (20 per cent) respondents incorrectly believed annuities were only available once someone had fully retired.

Meanwhile, 17 per cent of respondents believed that money held in an annuity would simply be lost on death.

L&G noted that some annuity options can continue to provide support to a spouse, partner or other beneficiary through features including joint-life arrangements and guarantee periods, although these can affect the starting level of income.

The findings were published alongside L&G’s new Annuity Myth Busters guide, which aims to provide clearer information on how annuities work and the different options available.

L&G managing director for lifetime mortgages business, and product and strategy director for retail retirement, Mike Batty, said: “People often recognise the value of a guaranteed retirement income, but many are unsure about how annuities work.

“Misconceptions about flexibility, timing and what happens after death can make an important decision feel even more complicated.”

He added that guaranteed income could help provide greater certainty for retirees.

“The stability of guaranteed income, through products such as an annuity, can lessen anxiety for retirees and create a greater sense of certainty," Batty said.

“By separating fact from fiction, we want to give people the confidence to understand their options and build a retirement plan that reflects their individual needs.”

---