Pensions - Articles - Research shows that less than a quarter will buy an annuity

 A CoreData Research study surveying over 500 respondents found the most popular way non-retired retail investors plan to generate an income stream in retirement is through the state pension, cited by 67% of respondents. This is followed by other personal savings such as cash ISAs, current accounts and savings accounts (40%), continuing to work (34%), income drawdown (30%), property (29%), other personal investments such as stocks and shares ISAs (28%) and buying an annuity (22%).

 “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,” said Craig Phillips, head of International, CoreData Research. “This indicates traditional retirement income products are being usurped by other tax efficient savings and investment vehicles.”

 Phillips added that the increase in the ISA annual allowance from £15,240 to £20,000 in April 2017 will further strengthen the product’s appeal. He also noted that the dividend allowance cut announced in the March 2017 Budget could encourage savers to place high dividend-paying investments within ISAs.

 “ISAs can present a good option for people looking to generate retirement income because income taken from them is tax-free,” said Phillips. “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.”

 A number of providers have recently announced they are pulling out of the annuity market, which has seen a slowdown in the wake of pension freedoms.