Annuity Rates/Options

ATF101

Hi, hubby is about to purchase an annuity and discovered (FSA site) that the benefits for level of income for spouse is only marginally affected by opting for 100% rather than 50% payment.
EG Based on a fund of £20,000, level income P/A works out at £1236 for 50% or £1176 for 100%.
The latter appears to be far more advantageous or am I missing something??

dunstonh

FSA site isnt that reliable for data. It doesnt show all the options and the figures are often out of date. It's not whole of market either. There is one provider that is using summer 2007 rates and quite a few that are still using August 08 rates. So, never make a decision on the FSA tables.

Also, the FSA tables use small values but providers will often give tiered annuity rates (a fund of £20k may get a lower rate than say a £100k). Plus some providers are buying business at the moment and its possible to play them off against each other to get a better rate.

The latter appears to be far more advantageous or am I missing something??

Depends on the ages of the individual and the quote options being used. There can often be small differences with some options as they dont statistically increase the risk that much.

ATF101

dunstonh wrote: »

FSA site isnt that reliable for data. It doesnt show all the options and the figures are often out of date. It's not whole of market either. There is one provider that is using summer 2007 rates and quite a few that are still using August 08 rates. So, never make a decision on the FSA tables.

Also, the FSA tables use small values but providers will often give tiered annuity rates (a fund of £20k may get a lower rate than say a £100k). Plus some providers are buying business at the moment and its possible to play them off against each other to get a better rate.

Point taken.

dunstonh wrote: »

Depends on the ages of the individual and the quote options being used. There can often be small differences with some options as they dont statistically increase the risk that much.

Ages 58 & 59, level annuity with a10 year guarantee. And thanks for your comments

MrChips

At those ages, and with a level annuity, changing the spouse's percentage from 50% to 100% only increases the risk (and hence price) by about 5%.

ATF101

MrChips wrote: »

At those ages, and with a level annuity, changing the spouse's percentage from 50% to 100% only increases the risk (and hence price) by about 5%.

Thanks MrChips.

On the face of it, it seems a decent deal.