One in five people over the age of 50 think they don’t provide value for money despite their rates being at a 14-year high, after increasing by almost 50% in the last 18 months.

Annuities, which provide a guaranteed income for life, have had somewhat of a resurgence this year with sales rising by 23% at the start of the year and their rates have improved significantly following the Bank of England’s successive base rate rises.

Rates have risen so much that the point at which savers receive their original investment back through income has been brought forward by five years.

But despite improving rates, 44% of older savers say they are inflexible even though it’s possible to choose a flexible annuity which allows someone to turn income off and on, as and when they need to.

Meanwhile 45% said they are risky because if you die earlier than expected you will lose out financially, according to the study from Canada Life. But it said customers can choose longer guarantees and protections when they buy an annuity to make sure any remaining money is paid to a beneficiary when they die.

Many of those asked said they were familiar with annuities but 39% went on to say they neither agreed nor disagreed that annuities offered good value, and 31% were unsure if annuities offered flexibility. The firm said this shows both a lack of understanding and awareness of how they work.

Separate research shows that the recent rate rises are boosting annual pension income by 20%.

‘Worth more than a cursory second glance’

Nick Flynn, retirement income director at Canada Life, said: “Annuities tend to be sold, rather than bought. This is exacerbated by the misconceptions that have built up around annuities as a product which has been out of fashion.

“But, they are worth more than a cursory second glance. From significantly improved rates, to longer guaranteed periods which effectively provide a money-back option, to retirement account annuities where your income can be switched on and off, there is so much more to explore with annuities than perhaps is seen at face value.

“Working with advisers, the industry needs to work harder to overcome the hurdles and provide clearer arguments to reconsider annuities. After all, they are the only game in town that can offer 100% peace of mind, that whatever happens, your retirement income will continue to be paid.”