Buying an Annuity
Discussion
The In Laws have a Pension Life Policy which matures in October and keep asking my advise, so here I am asking yours.
It will be worth about £44k, and they will want to take 25% in cash from the policy provider when it matures. Apparently there is a form they are filing out which asks them to provide the details of the Annuity provider.
Is buying an Annuity as simple shopping round for loan, or another financial products? Just find and comparison site and find who can give the highest monthly payout?
What are the pit falls?
Should they talk to an IFA (would prefer to avoid if not essential, just for simplicities sake)?
How much notice would the Pension Life provider need to have this set up as soon as it matures?
P.S. of course I know I can google this but its more fun here.
It will be worth about £44k, and they will want to take 25% in cash from the policy provider when it matures. Apparently there is a form they are filing out which asks them to provide the details of the Annuity provider.
Is buying an Annuity as simple shopping round for loan, or another financial products? Just find and comparison site and find who can give the highest monthly payout?
What are the pit falls?
Should they talk to an IFA (would prefer to avoid if not essential, just for simplicities sake)?
How much notice would the Pension Life provider need to have this set up as soon as it matures?
P.S. of course I know I can google this but its more fun here.
kentmotorcompany said:
The In Laws have a Pension Life Policy which matures in October and keep asking my advise, so here I am asking yours.
It will be worth about £44k, and they will want to take 25% in cash from the policy provider when it matures. Apparently there is a form they are filing out which asks them to provide the details of the Annuity provider.
Is buying an Annuity as simple shopping round for loan, or another financial products? Just find and comparison site and find who can give the highest monthly payout?
What are the pit falls?
Should they talk to an IFA (would prefer to avoid if not essential, just for simplicities sake)?
How much notice would the Pension Life provider need to have this set up as soon as it matures?
P.S. of course I know I can google this but its more fun here.
Put very simply:It will be worth about £44k, and they will want to take 25% in cash from the policy provider when it matures. Apparently there is a form they are filing out which asks them to provide the details of the Annuity provider.
Is buying an Annuity as simple shopping round for loan, or another financial products? Just find and comparison site and find who can give the highest monthly payout?
What are the pit falls?
Should they talk to an IFA (would prefer to avoid if not essential, just for simplicities sake)?
How much notice would the Pension Life provider need to have this set up as soon as it matures?
P.S. of course I know I can google this but its more fun here.
Buying an annuity is fairly simple.
1) You need to know what sort of annuity they want – flat, fixed escalation or inflation-linked
2) You need to know whether any spouse’s pension is required
3) You need to know whether any guarantee is required
4) You need to know whether there is any family history or medical condition which might entitle them to a higher annuity (following detailed underwriting)
If you need advice on the above, then an IFA will be able to help, but you would expect to pay for this service. A £33k annuity pot is small, and might be expected to produce a level annual pension of around £2-2.5k per annum.
www.thisismoney is a good source for the best rates
Setting up an annuity should be fairly straightforward.
They can defer taking an annuity if they think annuity rates will improve (but would then need to decide where to hold the money in the meantime).
Obviously an annuity is an income for life, so if they die sooner than “expected” the annuity will seem like poor value, conversely if they die later than “expected” the annuity will represent good value. On death there is no fund payable to descendants.
Sidicks
kentmotorcompany said:
The In Laws have a Pension Life Policy which matures in October and keep asking my advise, so here I am asking yours.
It will be worth about £44k, and they will want to take 25% in cash from the policy provider when it matures. Apparently there is a form they are filing out which asks them to provide the details of the Annuity provider.
Is buying an Annuity as simple shopping round for loan, or another financial products? Just find and comparison site and find who can give the highest monthly payout?
What are the pit falls?
Should they talk to an IFA (would prefer to avoid if not essential, just for simplicities sake)?
How much notice would the Pension Life provider need to have this set up as soon as it matures?
P.S. of course I know I can google this but its more fun here.
Hi, I'm an IFA. I would be happy to look at this for them nearer the time. I now have access toa new annuity purchase system which can produce a bit more income then the provider. PM me and I'll send you my details.It will be worth about £44k, and they will want to take 25% in cash from the policy provider when it matures. Apparently there is a form they are filing out which asks them to provide the details of the Annuity provider.
Is buying an Annuity as simple shopping round for loan, or another financial products? Just find and comparison site and find who can give the highest monthly payout?
What are the pit falls?
Should they talk to an IFA (would prefer to avoid if not essential, just for simplicities sake)?
How much notice would the Pension Life provider need to have this set up as soon as it matures?
P.S. of course I know I can google this but its more fun here.
PurpleMoonlight said:
With £33,000 left they can't really do much else than buy an annuity, unless they can combine it with other pension arrangements they have into a SIPP and take drawdown.
Shame really, as rates are currently the worst in living memory.
Google it and don't be so lazy.
I would go with the SIPP and put the money into blue chip stocks yielding about 6% as the dividends would probably be better than the payment from the annuity and when you die there will be something left to pass onto your family. Shame really, as rates are currently the worst in living memory.
Google it and don't be so lazy.
FLASHG1981 said:
I would go with the SIPP and put the money into blue chip stocks yielding about 6% as the dividends would probably be better than the payment from the annuity and when you die there will be something left to pass onto your family.
Except of course that the fund value is likely to be much too small for a SIPP.And the income from the SIPP could easily fall, and the capital could be eroded well before the policyholder dies.
But apart from that, top advice...
b19rak said:
Hi, I'm an IFA. I would be happy to look at this for them nearer the time. I now have access toa new annuity purchase system which can produce a bit more income then the provider. PM me and I'll send you my details.
Arent you a little bit embarrassed by this? Druming up business on a car website? Really? richtea78 said:
Arent you a little bit embarrassed by this? Druming up business on a car website? Really?
No, he shouldn't be. Pistonheads is a good way to get professional help like this. He's been a member long enough and posted enough so that we know he's not here just to drum up business.
Kent,
HMRC issued guidance last week on rates for annuities and drawdown income in retirement in light of the recent Test Achats ruling which revolved around using gender as the basis for discrimination in respect of pensions and insurance.
http://www.hmrc.gov.uk/pensionschemes/gad-announce...
I service a financial planning niche and have clients on the cusp of retirement. As ever, firstly, the question to ask is; is an annuity the way forward? It's important to note there are no guarantees. Annuity rates are tough to predict and could rise or fall and life expectancy (the expected difference between male and female lifespans) is not the only factor affecting annuity rates. If not, they should consider that they are in the funds correct for them to best achieve the long term objectives that one normally associates having a pension with, namely, duration, fund size and cost, attitude to risk and capacity for loss.
Men in retirement or planning to take an annuity could consider acting sooner rather than later to take advantage of higher male annuity rates. Women who can wait may want to consider deferring if they believe rates will rise, although they will miss out on income in the meantime and could be affected by other factors influencing annuity rates such as the yield on long term gilts and corporate bonds.
If they’re not ready for an annuity, income drawdown is an alternative, as is using 'dripfeed' drawdown from a pension fund. Rather than setting up a secure lifetime income in exchange for your pension savings (which can't normally be changed), income drawdown allows you to draw income directly from the fund. It's a more flexible but riskier option that allows them to stay in control. They might consider it if they don't need the security that an annuity offers but the income they might receive is not guaranteed because they remain exposed to market sentiment.
HMRC issued guidance last week on rates for annuities and drawdown income in retirement in light of the recent Test Achats ruling which revolved around using gender as the basis for discrimination in respect of pensions and insurance.
http://www.hmrc.gov.uk/pensionschemes/gad-announce...
I service a financial planning niche and have clients on the cusp of retirement. As ever, firstly, the question to ask is; is an annuity the way forward? It's important to note there are no guarantees. Annuity rates are tough to predict and could rise or fall and life expectancy (the expected difference between male and female lifespans) is not the only factor affecting annuity rates. If not, they should consider that they are in the funds correct for them to best achieve the long term objectives that one normally associates having a pension with, namely, duration, fund size and cost, attitude to risk and capacity for loss.
Men in retirement or planning to take an annuity could consider acting sooner rather than later to take advantage of higher male annuity rates. Women who can wait may want to consider deferring if they believe rates will rise, although they will miss out on income in the meantime and could be affected by other factors influencing annuity rates such as the yield on long term gilts and corporate bonds.
If they’re not ready for an annuity, income drawdown is an alternative, as is using 'dripfeed' drawdown from a pension fund. Rather than setting up a secure lifetime income in exchange for your pension savings (which can't normally be changed), income drawdown allows you to draw income directly from the fund. It's a more flexible but riskier option that allows them to stay in control. They might consider it if they don't need the security that an annuity offers but the income they might receive is not guaranteed because they remain exposed to market sentiment.
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