Including a guaranteed income in the “asset mix” of a retirees portfolio could lead to a more “sustainable income” and “higher death benefits”, new research has found.

In a white paper by actuarial firm Milliman published today, 22 October, it found that the combination of an annuity and a drawdown product would potentially deliver “a higher likelihood of achieving a person’s target income and a higher death benefit”.

The report looks at a 65-year-old woman, targeting a £4,000 a year income from a £100,000 pension fund, composed of 55 per cent equities, 5 per cent cash and the remaining 40 per cent in either bonds or an annuity.

Commenting on the findings Just Group group communications director, Stephen Lowe, said: “This is a ground-breaking report at a time when many thousands of retirees are seeking ways to balance pension flexibility with sustainability.

“It demonstrates that combining an annuity, rather than bonds, with equities in a drawdown strategy will increase the likelihood of maintaining the target level of income over the course of retirement. Perhaps counter-intuitively, it also shows that the equity-annuity strategy can ultimately deliver more generous death benefits too.”

Lowe added that the research was very important for advisers, which, “in the era of pensions freedom and choice”, highlights the value of guaranteed income for life.

Milliman said: “At a time when more complex enhancements to a pure drawdown strategy have struggled to gain traction and the regulator is increasing its focus on consumer outcomes in retirement, we believe this research is important reading for anyone actively engaged with the retirement market.”

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