NU won't take an annuity transfer from FP without an IFA?

Puzzzled

Hi everyone - newbie here.

Got 2 modest private pensions containing Protected/non Protected rights with both - 1 with NU and 1 with Friends Provident. Got my annuity quote from NU and its pretty much bang on with all the comparison tables - all fine. Got my FP quote and its about 30% down on the comparable NU one. Made sure it was comparing like for like etc and still dreadful. So asked NU for a quote for the FP funds transfer value and got back a fairly curt letter from NU saying "It is NU's policy that we will not accept a transfer of benefits from anaother pension provider unless financial advice has been given and the transfer is supported by a financial adviser".

Can anyone advise - really don't want another IFA taking a cut of my pension...do I?? Thanks.

dunstonh

Can anyone advise - really don't want another IFA taking a cut of my pension...do I?? Thanks.

An IFA wont be taking a cut out of it. What gave you that idea? The pricing is based on commission paid. If you dont use an IFA the provider keeps the commission for themselves.

Got my annuity quote from NU and its pretty much bang on with all the comparison tables

NU are coming out quite well at the moment. However, dont rely on comparison tables. You need real figures.

Annuity purchase is not cheaper if you DIY. In fact it can be more expensive (in fact I would put money on that if you have chosen NU as I reckon an IFA quote would beat the terms you have using the standard 1% commission. - mainly as most networked IFAs get enhancements on the NU default pricing).

Puzzzled

So..........you're advising start from scratch and get annuity quotes for both pension pots from an IFA?

dunstonh

Puzzzled wrote: »

So..........you're advising start from scratch and get annuity quotes for both pension pots from an IFA?

You may as well. You are paying for an IFA whether you use one or not.

The comparison tables are fine for basic data but if an IFA was getting a file checked and it was found they used the FSA tables or other similar data source for figures it would be frowned upon due to their unreliability.

Data tables assume defaults. Most IFAs negotiate better terms than defaults. Sometimes this is in commission, sometimes its in lower annual management charges (with investments) and sometimes its in better rates (for annuity or protection). So, worst case scenario, you wont be getting any less. Best case, you will get a bit more.

You say you have two pots, did you get open market option quotes or did you get transfer with immediate commencement quotes?

Puzzzled

Apologies - told you I was a newbie - I simply asked them for an illustration based on my earliest retirement date, which is early November. FP have given me a Projected Fund Value for my 50th birthday date. NU have given me an Individual Investment Account Illustration for the same date. Don't want to sound dull but they both give me the quotes for my policies - fund value, options (tax free lump etc) and transfer value.

dunstonh

Puzzzled wrote: »

Apologies - told you I was a newbie - I simply asked them for an illustration based on my earliest retirement date, which is early November. FP have given me a Projected Fund Value for my 50th birthday date. NU have given me an Individual Investment Account Illustration for the same date. Don't want to sound dull but they both give me the quotes for my policies - fund value, options (tax free lump etc) and transfer value.

No apologies required. You need an IFA and it wont cost you because the remuneration to the IFA is paid for by the annuity provider. its factored into the annuity rates you have received.

If you were to take the NU and FP annuities, either NU and FP would keep the commission they earmark for the IFA or they pay it to the original agent (if they are still authorised). If you approach the insurer directly, they will keep it for themselves. So, really no logic in DIY in this area.

Now, there are two ways to buy an annuity. Open Market Option or Transfer with immediate commencement (usually just shortened to transfer). With multiple sources (FP and NU in your case) you will find the majority or annuity providers will not do an open market option but require transfer. Transfer often gets you a better rate than OMO anyway when there are multiple sources.

What the IFA will do is take the figures you have got, research the market and see if they can be beaten. If they can be beaten, you get a better rate. If they cant, you have peace of mind that you checked. Either way, this new IFA will be paid (as he will become servicing agent for the old plans).

The IFA will also consider things like with or without proportion, arrears/advance payments, smoker and health status, possible income drawdown potential, increasing/level comparisons, guarantee options etc. Things which may or may not be available with the plans you have but could be on alternatives.

Buying a pension annuity is a once in a lifetime transaction. Once it is done, it is cast in stone for the rest of your life. You only get one chance to get it right.

Puzzzled

You're the guy with 10,000 Thank You's - happy for you to represent me. How do we take this forward?