More than three quarters (76 per cent) of people aged over-55 do not know that medical conditions or lifestyle choices could increase the money they receive from an annuity.
The Price of Freedom research by Legal & General (L&G) has shown that many retirees could be losing out on a higher pension income by not disclosing health issues or lifestyle choices, such as drinking or smoking.
Its survey of 2,000 over-55s also found that 8 per cent believed that ill health would reduce the amount of money they receive in retirement, while a further 18 per cent thought it wouldn’t make any difference to how much they get when they retired.
Legal & General managing director, Emma Byron commented: “People with health conditions, as well as smokers and drinkers, stand to benefit from better annuity rates – but only if they disclose everything to their financial adviser or annuity company.
“First and foremost, we need to help customers to understand the potential benefits of annuities, which offer them a guaranteed income for life in retirement.”
A potential cause for concern was that 5 per cent believed that telling an annuity provider about a medical condition would lead to them having their application rejected.
L&G’s research also found that a large number of people approaching retirement were unsure of what an annuity was. Around 47 per cent of over-55s could not accurately describe what an annuity was.
Less than half (49 per cent) of those surveyed said that they had heard of annuities and just 26 per cent of those who are retired said that they had an annuity.
Byron concluded: “It’s also important that our industry talks plainly to consumers, removing the jargon and explaining the options available in a clear and helpful way. Just 26 per cent of retirees have taken out an annuity, but there are thousands more who could benefit from a guaranteed income in retirement.”