When asked, 40% of the near 1,300 people surveyed said did not know what they would do with their pension when they retired.
A fifth (22%) said they expected to keep most of it invested but draw some of their pot, while 10% would potentially cash it all in.
Only 10% said they would use their pension to buy an annuity.
Annuities used to be the default option when converting private pensions into an income stream but have plummeted in popularity in recent years.
But, while income drawdown is three times more popular than buying an annuity, Tilney found that when the word ‘annuity’ was removed as an option, 79% of respondents said a pension that provided them with a “guaranteed income for life” was more appealing than one where the value and income varied year to year, even if it held out the potential prospect of better returns.
Tilney says this suggested the annuity name was tarnished but demand for what annuities aim to offer remained strong and that the “pendulum may have swung too far” towards drawdown.
Andy James, head of retirement planning at Tilney, said: “Annuities do have a bad reputation. That is partly down to the fact that historically most people went with the default option offered by their pension provider rather than shopped around for the best deal, but it is also because the relationship between annuity rates and
UK Government bond yields is a close one and these have been decimated by Bank of England policies in the aftermath of the financial crisis.
“Since former Chancellor George Osborne stood up in Parliament in his March 2014 budget and launched his ground-breaking overhaul of pensions by saying no one would have to buy an annuity in the future, we have seen 75% fewer people choosing to buy one when they retire and the number of annuity providers has
whittled down to just six since 2015.
“Indeed sales of annuity contracts hit their lowest point this century in the last quarter of 2016, with 17,000 purchased – a decline of over 80% on the same quarter three years early.
“However, a guaranteed income for life, which annuities provide very well, is clearly something that many retirees desire. It is difficult to resolve the level of sales of annuities with the need for certainty.”
He pointed to bond yields starting to rise again, albeit off a very low base, and said there are now tentative signs of green shoots appearing in the annuities market.
He said Tilney research suggested that rising yields and annuity rates also need to be accompanied by a process of “de-toxifying” public perceptions of annuities.
“In reality they should form the right solution for at least part of many people’s retirement plans,” he said.
“Drawdown is the right solution of some, especially wealthier savers who can perhaps endure a degree of uncertainty and fluctuations in income levels, but it is not right for everyone.”
The research was conducted by Opinium for Tilney via an online survey in April. It looked at the attitudes of 1,293 nationally representative UK adults (aged 18+) who had at least one workplace pension.