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Third of public unaware of annuities

More than a third of over-45s in the UK have never heard of annuities and less than a third are aware of the open-market option, according to Mori research for MGM Assurance.

The research found only 63 per cent of people aged over 45 had heard of annuities while just 28 per cent knew of enhanced annuities and 11 per cent knew about impaired life annuities.

The Mori survey, which questioned 950 people about their knowledge of pensions, also found that only 31 per cent of respondents knew about Omo. More than half, 52 per cent, did not have any idea where they could buy an ann-uity compared with 11 per cent who thought you could only buy an annuity from their pension plan company.

The survey also found that women had less knowledge of pensions than men, with 43 per cent of women not having heard about annuities compared with 30 per cent of men.

MGM says it is worrying that those nearer retirement in the over-55s category knew less about their retirement options than those in the 45 to 55 age group. The company also says the issue of enhanced annuities revealed very low awareness and often vehement opposition to the concept, with 7 per cent believing an active sportsperson would be entitled to an enhanced rate.Only 3 per cent said smokers could get higher rates.

MGM says most respon-dents said it was unfair that smokers and the obese could get access to higher rates.

Pensions development manager Tim Gosden says: “So many people are walking blind into retirement. There is a basic misunderstanding about how enhanced annuities work. This low understanding means thousands are losing out on higher retirement income.”

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