Almost half (45 per cent) of UK adults aged over 50 do not know that annuities come in a variety of forms with different benefits, research by Standard Life has revealed.

Just over a quarter (26 per cent) were familiar with level annuities, while 24 per cent were aware of inflation-linked annuities and 10 per cent knew about enhanced annuities.

Over-50s were most likely to be familiar with single-life annuities, with 37 per cent saying they were aware of them.

Just 10 per cent were aware of value/capital protection, which would allow them to protect all or part of their annuity payment as it gets paid as a lump sum when the annuitant passes away.

Standard Life found that over-50s were under the misapprehension that annuities would not allow them to pass on wealth to surviving relatives in the event of their death and described this as a key barrier to people purchasing annuities.

More than one in 10 (13 per cent) were not planning to purchase an annuity for this reason, with 56 per cent of over-50s not aware that an annuity can be set up to cover the life of a surviving partner.

“There is comfort in the income certainty provided by an annuity which is invaluable when planning for retirement,” said Standard Life head of annuities, Pete Cowell.

“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.

“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.”

---