The Annuity Blind Spot: Why UK Retirement Security is at Risk

Executive Summary

Millions of people in the UK are on track to experience poverty in retirement. Government data show that 45% of adults are saving nothing for their pensions.

In a call for evidence to the Work and Pensions Committee earlier this year, Pensions UK, then the Pensions and Lifetime Savings Association, highlighted women, ethnic minorities, people with interrupted and insecure working patterns, people with ill health or disabilities, and self-employed people, as groups at a disproportionately higher risk of experiencing retirement poverty.

The gender pension gap in particular has remained persistent, despite a significant rise in women’s participation in the labour market and the introduction of auto-enrolment for workplace pensions from 2012.

So how could annuities help solve the UK’s pension savings crisis?

Annuities are a financial product that provide people with a regular, guaranteed income during their retirement. They can be purchased from insurance companies, using pension savings. For example, at the age of 55*:

Someone could take a quarter of their pension pot as a tax-free lump sum
Leave half of it in investments
Use the remaining quarter to buy an annuity.

*57 from 2028.

Our survey found that:

Many people want the stability and predictability that annuities offer but lack understanding of these products.
Women are generally less familiar with how annuities work and how they can get the best deals.

This suggests that the industry needs to do more to engage with people who could benefit from annuities but currently have no plans to buy these products. Before we discuss this in detail, we’ll explain how this survey was conducted and the highlights of our findings.

Introduction

In September 2025, Punter Southall commissioned YouGov on behalf of Kayak PR to conduct a survey to assess current attitudes to annuity products in the UK.

It was conducted using an online interview to a random selection of members of YouGov Plc UK’s panel of over 2.5 million individuals who have agreed to take part in its surveys.

The desired outcomes

By providing fresh insights into UK attitudes towards annuity products among adults over 50, this report can offer constructive ideas and recommendations on how the industry can boost engagement with these products and help reduce the UK’s pension savings gap.

Recent YouGov research has shown that most people in the UK aren’t saving enough for their pensions. About 4 in 10 (38%) aren’t confident about their financial security in retirement – and broken down by gender there is a notable confidence gap – 44% of women versus 31% of men.

These findings demonstrate that there is still significant inequality in the UK’s pensions sector, which needs to be urgently addressed. This is why building a greater understanding of annuity products and how they can offer a guaranteed income for life is essential.

Methodology

Emails were sent to panellists selected at random from the base sample. The e-mail invited them to take part in a survey and provided a generic survey link. Once a panel member clicked on the link, they were sent to the survey that they were most required for, according to the sample definition and quotas. (The sample definition could be “GB adult population” or a subset such as “GB adult females”). Invitations to surveys didn’t expire and respondents could be sent to any available survey. The responding sample was weighted to the profile of the sample definition to provide a representative reporting sample. The profile is normally derived from census data or, if not available from the census, from industry accepted data.

The survey

All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2058 adults. Fieldwork was undertaken between 9 – 12 September 2025. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 50+).

The results – key findings

What people over 50 want from their retirement income

Just over a third (35%) of UK adults age 50+ want a “steady and stable” retirement income.
24% want to be “always prepared”, with a regular income and a reserve kept for essential bills and unexpected costs.
18% want to be “flexible and responsive”, adjusting spending year by year depending on needs.
Concerningly, about 1 in 9 (11%) hadn’t thought about their spending habits yet.

This research indicates that many people want the stability and predictability that annuities offer; however, many won’t end up purchasing annuities, often due to a lack of understanding or trust in these products.

Understanding of annuity products in the UK

There is limited understanding of annuity products, even among people who are approaching retirement or are already retired.

Most respondents weren’t aware of what annuities were or how to distinguish them from pension drawdown or lump sum.
Most who said they wanted a guaranteed and regular income in their retirements could not identify annuities as a potential means for achieving this objective.

There was a notable correlation between increasing age and greater understanding of annuity products.

30% of people aged 50-54 said they didn’t know how to describe their feelings about using their pension savings to buy an annuity for their retirement income, compared to just 11% of people aged 75+.
One possible explanation is that this group is more likely to have purchased annuities when they were compulsory before then-chancellor George Osborne scrapped this rule in 2014.

Differences between social grades

When asked about how they would spend their money in retirement, people in the higher social grade ABC1 were more likely to say “always prepared”, or “steady and comfortable”. These responses would imply this group is more open to a guaranteed, fixed income that an annuity can provide.
However, when asked to select one of four answers that would describe their feelings about buying an annuity, this group was more likely to select “I’m concerned they might not be good value for money”. 23% gave this response, compared to just 15% in the C2DE social class.

Understanding of how annuities respond to inflation

When respondents were asked to select one answer that best describes their understanding of how annuities handle inflation, there were some notable differences between the genders.

Most women don’t know annuities are adjusted for inflation

26% of men said they understood they could choose options that increase income each year, whereas only 13% of women gave this response. The majority (60%) of women said they were unsure if annuities offered any protection or adjustments for inflation, compared to just 43% of men.

Younger respondents were more likely to report they were unsure compared to those over 60, although the difference wasn’t as stark as the gender split.

One of the key limitations of this data is that it didn’t segment men’s and women’s responses by age.
It would have been interesting to understand the gender difference for different age bands to determine whether the gender gap increases or decreases as people get older.

Desired financial experience in retirement

When asked about the financial experience they would most like to have in retirement:

51% of parents/guardians expressed a desire for comfort and freedom to enjoy life’s pleasures and cover unexpected costs, compared to 44% of non-parents/non-guardians.
52% of women cited “comfort and freedom to enjoy life’s pleasures and cover unexpected costs”, compared to just 46% of men, although this was the only notable gender difference in the responses for this question

Annuities as insurance products

When asked how they feel about using pension savings to buy an annuity for retirement income:

A much higher proportion of women said they do not have any pension savings and will only access the state pension (15% compared to 9% of men). This is a concerning but unsurprising finding, bearing in mind that men, on average, have significantly larger private pension savings.
People who were married or in a civil partnership were more likely to express a negative view of annuities compared to those who had never married.
Another limitation of this data is that it doesn’t provide a gender breakdown of marital status. Pensions UK research shows that single older women are at an elevated risk of experiencing poverty in retirement (23% compared to 13% of pensioner couples and 20% of single older men). It would have been useful to see this data to examine whether there is a clear gender discrepancy among this group’s attitudes to annuities too.

Impact of health on annuity income

Interestingly, men were more likely to know that being open about their health could lead to better annuity rates. 27% of men were aware of this, compared to just 17% of women.
However, 44% of women said they assumed being honest about health was required but didn’t know it could lead to better rates, compared to just 33% of men.

These are two statistically significant gender differences that suggest men are more likely to understand how personal information can influence annuity rates. It could imply that women may be less likely to benefit from the best annuity rates, which could restrict their retirement savings and contribute to the persistent gender pensions savings gap.

Londoners least likely to be concerned about a spouse or partner receiving an annuity income

Participants were asked to imagine they have purchased an annuity. If they died shortly after, how important would it be for the annuity to provide an income for their spouse or partner? Only 47% of people in London said this was “very important”, compared to 62% of people in the West Midlands.

Men more likely to know their rights to shop around

Interestingly, 27% of women said they didn’t know they could shop around for annuity products, compared to just 19% of men. A majority (59%) of men said they can and should shop around for the best deal, compared to just under half (49%) of women, which, again, suggests women have less awareness of how annuity products work.

The relationship between annuities and inheritance tax

In 2024, the chancellor Rachel Reeves announced that defined contribution pensions would no longer be exempt from inheritance tax from 2027. This change has significant implications for people with large private or workplace pension savings who were planning to transfer to the next generation any unused savings after they die.

However, annuities can be exempt from inheritance tax, under certain situations, which could enable people to pass on a larger share of their wealth to the next generation, tax-free.

When asked whether this information would make them more or less likely to buy an annuity, 24% of women said they didn’t know, compared to just 18% of men.

People in C2DE social grades were also less likely to understand the potential tax advantage of annuities. 28% said they didn’t know about the possible inheritance tax exemption, versus 18% in social grade ABC1.

Limitations of this survey

Although the questions in this survey provided deep insights into public attitudes towards annuity products from different groups, there were a few key limitations which should not be overlooked as the industry seeks to reduce the national pensions savings gap.

The survey did not examine differences in attitudes to annuity products based on religion or ethnicity. As we mentioned earlier, Pensions UK has highlighted that ethnic minorities are at a higher risk of experiencing poverty in retirement. It is important to investigate these discrepancies and offer new insights that can help the industry identify potential solutions.

The survey did not ask respondents whether they had actually purchased an annuity product. This would have provided some useful context for the recommendations of this survey, particularly with regard to the gender gap, if one had been identified.

Furthermore, the survey did not provide a breakdown of attitudes towards annuity products by age and gender concurrently. This may have identified a growing or falling gender gap in attitudes as men and women get older, which could have provided some interesting analysis.

Recommendations

This survey highlights a clear gender gap in understanding of annuities

This is the most striking disparity identified in this report, although other disparities also exist between different age groups, regions and social classes.
Although the state pension gender gap has reduced somewhat, there is still a substantial private pension savings gap between men and women which is unlikely to be resolved anytime soon.
Many respondents, particularly women, are also relying on the state pension for their entire retirement income.

One opportunity for the annuities industry is to highlight the competitiveness of current rates

Annuity rates are the highest for about 10 years. There has already been a 34% increase in total annuity sales since 2023, sparked by higher rates and a greater desire for guaranteed income. Research has shown that the most common age to buy an annuity is 65, and 36% of buyers received financial advice before buying one in 2024, compared to just 29% in 2023.

However, our survey still shows there is a gap between what people want and what they will ultimately choose to do. Furthermore, it is regrettable that data on the proportion of annuities owned by women versus men is difficult to access, as this would provide valuable context for our survey findings.

However, research from the US indicates that women may be more interested in these types of products than men. The data, from the US Alliance for Lifetime Income report, showed that 48% of women aged 61 to 65 were interested in owning an annuity, compared to just 37% in the same age bracket.

This research also found that 60% of women said their financial adviser didn’t explain or discuss annuity options, compared to just 44% of men. Furthermore, 43% of women purchased an annuity based on the recommendation of their adviser, compared to just 20% of men. While it is important to recognise there are significant differences between the UK and US, this is an interesting finding after our survey showed there was less understanding of annuity products among women in the UK.

Based on these findings, access to and the quality of financial advice may still play a role in the persistence of the gender pensions savings gap

UK research from Unbiased has revealed that 69% of women have never seen a qualified financial adviser, compared to 64% of men. Although this is not a significant gap, women are set to hold 60% of UK wealth by the end of this year but are still less financially engaged than men. Furthermore, Schroders research has found that just 10% of financial advisers even have a tailored strategy on how to engage with women in the financial advice process.

Our survey, and the external research we have referred to, strongly suggests that the financial services industry is still struggling to engage with women.

To conclude, here are some final recommendations on how the industry can tackle this problem

1 – Emphasise the value of a blended approach to pension savings

An annuity can be combined with a private pension, the state pension, and any workplace pension savings that have been built up over the course of someone’s career. These could be referred to as the four building blocks to building a secure retirement income.

2 – Publish data on the gender differences in participation rates and annuity payments

If possible, the industry and/or the government should publish data on:

the proportion of women owning annuities compared to men
the median and mean value of annuities payments for men and women

3 – Highlight the fact that women have longer life expectancies

Because women live several years longer than men, on average, they may be particularly well suited to annuity products, which offer a guaranteed income for life, unlike private pension savings.

4 – Emphasise that annuities can be a good match for people with lower risk appetites

Research suggests women are more risk-averse with money and are less likely to invest in the stock markets. Because annuities offer guaranteed income with very little market volatility, they could be an appropriate solution for bridging the gender pension savings gap and for anyone (men and women) with lower risk appetites. The industry should also raise awareness of the fact that, under the Financial Services Compensation Scheme (FSCS), the sum of an annuity purchased by an FCA-regulated provider is guaranteed up to any amount, should that provider cease trading.

5 – Encourage financial advisers to offer strategies that are tailored to women

Women are more likely to purchase an annuity based on the recommendation of an adviser, whereas men are less likely to rely on an adviser. This has important implications for the gender pensions savings gap, which is why it may be prudent for advisory firms to consider offering tailored financial advice strategies for women.

Conclusion

This survey shows that many people desire a stable and predictable retirement income. However, this desire doesn’t always translate into people buying annuities. If the industry can reposition these products as powerful tools for boosting pension income, or as low-risk alternatives to investing, more people may be tempted to buy them. The industry also needs to consider how it engages with women, who still face a significant private pension savings shortfall and are less likely to understand how annuities work. This can help reduce the UK’s overall gender pension gap and ensure more people achieve a minimum standard of living when they retire.

Appendix A — Survey methodology

Commissioned by Punter Southall (on behalf of Kayak PR)
Research provider: YouGov Plc
Survey respondents: UK adults aged 50+
Sample size: 2,058
Fieldwork: 9–12 September 2025
Survey mode: Online
Sampling based on age, gender, region, social grade
Weighting: representative of UK adults aged 50 and above

Appendix B — Question list (10 items)

RKN_Q1. For the following questions we would like to understand your thoughts and feelings about your retirement plans. If you are already retired please think about what you have experienced since retiring as well as your future plans, if you don’t plan to ever retire please choose the “not applicable” option at the bottom of the list below. Which, if any, of the following best describes how you would ideally spend or plan to spend your money in retirement? (Please select the option that best applies)

RKN_Q2. Which ONE, if any, of the following best describes the financial experience you would most like to have in retirement?

RKN_Q3. An annuity is an insurance product you can purchase with a lump sum of money, typically from a pension pot, to provide a guaranteed income for a specific period or for the rest of your life. If you are retired we are still interested in your opinion. Which ONE, if any, of the following best describes your feelings about using your pension savings to buy an annuity for retirement income? (Please select the option that best applies)

RKN_Q4. As a reminder an annuity is an insurance product you can purchase with a lump sum of money, typically from a pension pot, to provide a guaranteed income for a specific period or for the rest of your life. To what extent do you agree or disagree with the following statement? “Buying an annuity means your money is completely ‘locked in’ forever.”

RKN_Q5. Please imagine that you have purchased an annuity… If you were to die shortly after starting an annuity, how important, if at all, would it be for your annuity to provide income for your spouse or partner instead?

RKN_Q6. Being open about your health (for example, conditions such as high blood pressure or lifestyle factors such as smoking) can result in receiving a higher annuity income due to life expectancy predictions. To what extent, if at all, were you aware of this?

RKN_Q7. For the following question, by “fixed-term annuity” we mean an insurance contract that provides a guaranteed payment for a predetermined period, such as 10, 20, or 30 years. Which if any, of the following situations do you think a fixed-term annuity could be useful for? (Please select all that apply)

RKN_Q8. An annuity is an insurance product you can purchase with a lump sum of money, typically from a pension pot, to provide a guaranteed income for a specific period or for the rest of your life. Which ONE, if any, of the following best describes your understanding of how annuities handle inflation? (Please select the option that best applies)

RKN_Q9. Which, if any, of the following best describes your understanding of your right to “shop around” the market when buying an annuity? (Please select the option that best applies)

RKN_Q10. Under recent changes, annuities are exempt from inheritance tax in certain situations, meaning some or all the remaining value could be passed on tax-free. How much more or less likely would you be to buy an annuity based on this information, or does it make no difference? (Please select the option that best applies. Even if you already have an annuity we are still interested in your opinion)