Despite consumers feeling more confidence about available annuity options the vast majority are still not getting the best product and rate in retirement, Association of British Insurers (ABI) research has found.
Analysis of annuity attitudes following the launch of the organisation's code of conduct found there was "plenty of room for improvement".
The code, mandatory for all ABI members, came into force in March. It compels providers to start communications about annuities earlier, prompt savers to gather quotes from other providers and highlight alternatives such as enhanced annuities.
In consumer research published today, the ABI said understanding of retirement decisions is high, but a significant proportion of savers still do not read the information sent to them, do not feel able compare quotes, and do not buy enhanced products.
The research said 85% of pre-retirees and 87% of annuity purchasers were aware of the option to defer retirement. Almost three quarters of pre-retirees were comfortable with their level of understanding and nearly nine in ten of those about to buy an annuity were confident they fully understood their options.
However, 36% of consumers did not read the ‘wake-up' packs sent to them in the months running up to their retirement date, and 32% did not feel they know enough to compare annuity quotes from different providers.
Despite 77% of pre-retirees saying they have a basic or good understanding of different annuity types, actual purchases of joint, index-linked, enhanced and impaired life products remained low compared to estimates of how many people are thought to be eligible for them.
The research said smokers are no more likely to consider enhanced or impaired products than non-smokers. Of those who may be eligible, 66% are aware of them, 22% consider them and just 16% actually buy them.
Among those who may benefit from a joint life annuity, 87% are aware of the products, 58% consider them and 48% purchase one.
More than nine in ten annuity purchasers are aware of shopping around, but less than half gathered quotes from different providers. While 63% said they shopped around, just 30% bought an annuity from a different provider to the one they saved with.
Just over half of respondents said they took some kind of advice before buying, but only 35% used a financial adviser, while 17% spoke to their pension provider.
Hargreaves Lansdown head of pensions research Tom McPhail said: "Only 16% purchased an enhanced annuity. This is in spite of research elsewhere showing that well over 50% of annuitants qualify. The reasons cited for not shopping around were not rational. Examples include: ‘satisfied with existing provider; did not think it was worth the effort; trust in existing provider'."
McPhail also reiterated the call, voiced by many when the code was launched, for The Pensions Regulator (TPR) to ensure similar standards for at-retirement processes are implemented in the trust-based defined contribution (DC) sector.
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