The annuity provider surveyed 1151 people at retirement and found 73 per cent did not properly understand what an annuity was and almost 80 per cent had never heard of the open market option.
Annuitants missed out on £500m worth of extra income by not shopping around last year according to Just Retirement which says the additional funds would be good news for retirees, providers and Britain’s economy in general.
Marketing and distribution director David Cooper says by having greater understanding annuitants will be far better placed to shop around and make the most of their income.
He says: “Awareness of annuities and the open market option is something about which retirees need more and better information. With the current economic climate looking uncertain, people need to do everything they can to maximise their pension and ensure that they are receiving the best possible deal. It is shocking to learn that well over two thirds of Britons at retirement age do not understand what an annuity is, with 28 per cent never having even heard of the term. Furthermore nearly 80 per cent are unaware of their right to exercise the open market option. With knowledge levels this low it unsurprising that so many people end up purchasing an annuity through their provider without being aware they can go elsewhere for a better deal.”