UK adults approaching retirement demand guarantees on their income and are increasingly likely to use an annuity to get it, finds Aegon.

Figures reveal that up to 90 per cent of people value guarantees on their retirement income and, compared with traditional annuities, bonds and income drawdown, nearly 60 per cent are most likely to choose a retirement product that provides a minimum guaranteed level of income for life and that offers the potential to increase over time.

To highlight the growing market for variable annuities, AEGON’s consumer research sought to gauge the attitudes of people over the age of 45 towards guarantees and alternative retirement solutions.

When asked, in the context of the current financial climate, if they would now be more likely to consider a variable annuity type product to secure a guaranteed minimum lifetime income, 35 per cent of people said they would.

Gordon Greig, head of individual marketing at AEGON, says, ‘Our research has revealed that larger numbers of people are drawn to products that will provide them with guarantees in the current financial climate.’

Aegon recently launched its AEGON Secure Lifetime Income product, a variable annuity retirement solution that combines the benefits of a purchased life annuity, which provides a guaranteed income for life, and an investment bond, which provides investment flexibility, growth potential and valuable inheritance benefits.

The guaranteed minimum income from AEGON Secure Lifetime Income starts at between 3.5 per cent and five per cent of the original investment, depending on the age of the customer when they start taking income. This minimum income level has the potential to grow each year in line with any increases to the underlying investment.

Greig says, ‘The variable annuity market is growing as more customers and advisers become familiar with the ‘third-way' concept. It is encouraging to see that people are recognising the importance of this market and the value for money that variable annuities provide.’