Claire Altman, Managing Director of Individual Retirement at Standard Life comments:
“Annuities were once the dominant retirement income option, but as today’s note highlights, they now account for around 10% of the market. What’s interesting is that sales appear to have levelled off after a period of decline following the introduction of the pension freedoms. The trend makes this an interesting time to look again at the role annuities can play and we’re delighted to be part of the consortium sponsoring the PPI’s upcoming research.
“With DB provision continuing to decline, stock market volatility on the rise and people continuing to under-estimate their own longevity, annuities can play a valuable role in providing income certainty. However, if this market is set to grow again it will need to address the misconceptions that many people hold about annuities and make a case for how they can be used in combination with drawdown rather than as an alternative to it.
“Our sponsorship of this research mirrors our work with the Organisation for Economic Co-operation and Development (OECD) which is looking at these challenges from an international perspective and examining the products and policy interventions being used to help improve certainty of income in retirement elsewhere.”