Inadequate knowledge a barrier to annuity take-up
Inadequate knowledge and understanding have been cited as major barriers to the take-up of annuities among pre-retirees, according to new research from CoreData.
CoreData's 2016 Post-Retirement Report found that fewer than 32 per cent of pre-retirees claimed to have a good understanding of what an annuity can offer, while only 27 per cent were likely to consider purchasing one in retirement.
Kristen Turnbull, CoreData WA head, said that while annuities are not well understood, there is latent demand for the features that an annuity can offer.
"The two key things that pre-retirees want in managing their retirement savings are a guaranteed income stream and to meet their desired lifestyle," Ms Turnbull said.
"Financial advisers need to find ways to talk to members about income solutions available in retirement in a language that they understand."
The research also found that digital engagement is emerging as a key education tool for superannuation funds, with a strong demand for funds to provide information online.
It found almost 55 per cent of pre- and post-retirees would like their main fund to make information available on the fund's website, while 50 per cent would like their fund to provide interactive online tools, both up from 52 per cent and 44.5 per cent respectively in 2015.
On the flipside, 34 per cent of pre- and post-retirees want their fund to increase their awareness and understanding of retirement solutions through mailed out brochures, down from 41.1 per cent in 2015.
"Funds that think digital engagement is only for younger generations need to broaden their mindset," Ms Turnbull said.
"The rise in 'silver surfers' is seeing the older demographic using digital channels more and more as a way to engage with their service providers."
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