Annuity quote

Pez

Have to decide on annuity quote on impaired life.:o

£1322 level, 10 year guarantee, 50% spouse's pension
£919 3% or RPI 10 year guarantee 50% spouse's pension
£1203 Level 100% spouse's pension

Husband 64, me 58.

The level, 100% seems a good deal as it will remain that for however long either one of us live.
Since my own (spouse's) pension provision isn't great, it seemed quite good value.

Am I missing something? Not seeking advice but yr opinions are v.helpful - we have to go with one of the quotes by tomorrow.

dunstonh

One assumes you have sought advice on this as a number of the enhanced/impaired annuity providers will only deal through IFAs. What does the IFA tell you about the options (considering the IFA knows more about your circumstances than we do)?

Pez

The adviser thinks we should go with the 3% - it's what he always recommends, he says, It's just lots of other people say to go level at the moment, that the level is better value overall. Husband will be 75 by the time the level and 3% are paying at the same rate.

dunstonh

It tends to take around 13 years to break even depending on what indexation. What you are asking here is to calculate your life expectancy. Of course, for most people they dont have a clue. If you have lots of other sources of income or income potential (e.g. investments) then it may be worth going level. If it is your only source (or major source) of income then increasing gives you more security later.

In reality there is no way to tell what option is best until you die. There is no 100% rule here. That said, I would probably prefer RPI linking to 3% as there is often not a lot of difference and RPI tends to spend most of its time above 3%.

EdInvestor

Ask for a quote for 3% plus 100% spouse's pension.

Could you save the post tax difference between the 3% payment and the level payment? That will provide you with some inflation protection.