Experts point to 'limitations' of conventional annuities

Conventional annuities have considerable limitations when it comes to offering good value for retirement investors, a poll of industry experts appears to have indicated.

Figures from Prudential show that the majority of advisors do not believe conventional annuity arrangements offer good value for their clients' money and 70 per cent are convinced the rates on these deals will fall or remain low.

In addition, the research found that a full 90 per cent of advisors expect that the popularity of with-profits annuities will increase by 20 per cent or more over the course of the coming year.

Aston Goodey, head of annuities at Prudential, commented: "There's no doubt that level conventional annuities still have a major part to play in the annuity market as not all the annuity options available to customers will be viable.

"However, what is interesting to see is that advisers are recognising some of the limitations associated with these products and are now looking at some of the alternatives."

Last week, Prudential research found that 45 per cent of adults in the UK expect to never have enough financial security to retire.