Less than a quarter, 22 per cent, of non-retired people plan to buy an annuity when they reach a pensionable age, CoreData Research has revealed.

According to CoreData’s recent study surveying over 500 people, the most popular way that non-retired respondents plan to generate an income in retirement is through the state pension, (67 per cent).

This was followed by 40 per cent planning to use ISAs, current accounts and savings accounts and 34 per cent continuing to work. Thirty per cent plan to use income drawdown, 29 per cent reliant on property and 28 per cent looking to other personal investments such as stocks and shares ISAs.

CoreData Research head of international Craig Phillips said: “It is interesting that personal savings including cash ISAs rank higher than both income drawdown and annuities while personal investments including stocks and shares ISAs are considered above annuities. This indicates traditional retirement income products are being usurped by other tax efficient savings and investment vehicles.”

“ISAs can present a good option for people looking to generate retirement income because income taken from them is tax-free. But with cash ISAs currently offering very poor rates, stocks and shares ISAs are likely to be a more attractive option for those willing to accept some investment risk.”

Phillips noted that the ISA’s appeal is likely to grow following the product’s annual allowance increase from £15,240 to £20,000 in April 2017. While the uptake of ISAs are on the rise, a number of providers have recently announced their departure from the annuity market, which has been affected since the pension freedoms.

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