Many over 55s struggle to understand annuities
Published on 25 August 2014 04:30 PM
Two fifths of over 55s struggle to understand annuities
- Over half (56%) of those approaching retirement admit they find pensions confusing
- Over four fifths (85%) of the UK find finance complex
- Over 55s trust the financial services industry least
For many people the process of purchasing a financial product is a step into the unknown. New research* from Age UK Enterprises, the commercial services arm of the charity, finds that as annuity sales continue to fall, over two fifths (44%) of over 55s admit they struggle to understand how annuities work. More broadly, two fifths (42%) of later life consumers confess they find pensions difficult to understand.
Despite nearly a fifth (19%) welcoming the changes to pensions introduced by Chancellor George Osborne at the Budget, many people across all ages have a limited understanding of how the changes will impact them. Of those aged 45-54 there is even greater confusion; almost half (46%) find annuities difficult to understand, and worryingly over half (56%) admit to not fully understanding pensions, which could prove problematic for them when it comes to planning for retirement.
The Age UK Enterprises research also revealed that over four fifths (85%) of UK consumers find the financial services industry so complex they struggle to understand many of the products they already have as well as those on offer to them. Only just over a tenth (14%) of people feel very financially savvy.
When asked about what is preventing people in later life from improving their financial understanding, a fifth (21%) of over 55s identified the language used to describe financial products as being too confusing. When looking for personal finance advice, the internet is the first port of call for 40% and 15% would ask a family member or a friend. Less than a tenth (8%) of UK consumers would turn to their bank or financial provider when they are struggling to understand a financial product.
One of the biggest challenges facing providers is the lack of trust that consumers have in the financial services industry. Those aged 55 and over displayed the least trust compare to the average of the population as a whole, with one in five (21%) admitting that this is the biggest barrier they face when it comes to dealing with their finances.
Gordon Morris, Managing Director of Age UK Enterprises, said: 'While many people have welcomed changes to the pensions industry and more of us are saving for the future through automatic enrolment into workplace pension savings, it is very worrying to find that so many are unsure about the financial products available to them, especially those approaching retirement. Taking control of your finances whatever your age, and especially at retirement, is vital but can only be achieved if people understand the financial services products they have, and those on offer to them.'
Please see the Age UK Annuity Jargon Buster webpage for more help as well as links to other organisations who can assist.
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For further information, please contact Rachel Finlay or Ellie Pocock on 0207 360 7877 or firstname.lastname@example.org.
Notes to editors
* Research commissioned from OnePoll Research on behalf of Age UK Enterprises. Total sample size was 2000 of the 18+ age group of which 1,250 consisted of the 55+ age group. Fieldwork was undertaken in July 2014. Figures were weighted to be nationally representative of the GB population aged 18yrs+.
** Figures obtained from the Association of British Insurers. Source
Date accessed 05/08/14
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We provide free information, advice and support to over five million people; commercial products and services to over one million customers; and research and campaign on the issues that matter to people in later life. Our work focuses on five key areas: money matters, health and well-being, home and care, work and training and leisure and lifestyle. We work with our national partners, Age Scotland, Age Cymru and Age NI (together the Age UK Family), our local Age UK partners in England and local Age Concerns. We also work internationally for people in later life as a member of the DEC and with our sister charity Help Age International.
Age UK is a charitable company limited by guarantee and registered in England (registered charity number 1128267 and company number 6825798).). Charitable services are offered through Age UK and commercial products are offered by the Charity's trading companies, which donate their net profits to Age UK (the Charity).
Age UK Enterprises
To fund its charitable activities, Age UK needs a constant flow of independent income. It seeks to achieve this through a balance of traditional fund raising and trading activities.
The trading activities, through Age UK Enterprises enable it to meet the needs of older people, through products specifically designed to meet these needs; quality products such as general insurance and energy services. Age UK Enterprises is the commercial services arm of Age UK.
For more information about the products and services offered by Age UK Enterprises please visit our website by logging on to www.ageuk.org.uk/products
Age UK Enterprises Limited is authorised and regulated by the Financial Conduct Authority for insurance mediation (311438) and to introduce potential annuity customers. Age UK Enterprises Limited is registered in England and Wales No. 3156159, registered office: Tavis House,1-6 Tavistock Square, London WC1H 9NA. VAT Number: 710 3843 66. Age UK Enterprises Limited is a wholly owned subsidiary of Age UK (registered charity No. 1128267 and registered company No. 06825798) and donates its net profits to Age UK.