Annuity purchase through Cavendish Online

saverbunny

Pease could anybody who has recently purchased an annuity through Cavendish Online in order to get the commission rebated to them please let me know what their experience of Cavendish was, how the procedure worked and how long it took to get the commission and whether they were happy with Cavendish.

Many thanks.

Saverbunny

dunstonh

Commission rebates on pension contracts is against HMRC rules. We know people have mentioned this before that they do it but when checked up with multiple sources, we were informed you cannot rebate commissions. Cavendish are, so either they know a loophole or they are dont realise what they are doing.

EdInvestor

One of the problems with buying an execution-only annuity is that the annuity market is not transparent and it is hard to get up-to-date information on annuity rates as an individual.

You will have to tell Cavendish which annuity you want to buy.Are you confident you can find that information out by yourself?

chesky369

Buying an annuity is the probably the area for which an IFA is most important. There are annuities open to them which simply aren't available to we lesser mortals and those are the very ones with the best rates.

Debt_Free_Chick

The commission is not and cannot be paid back as cash. It's used to reduce the charges inherent in the pension contract.

In an annuity, Cavendish buy on "nil commission" rates, which means the pension paid is increased.

It's just a normal "nil commission, but pay a fee instead" arrangement.

Crucially, however, Cavendish are not providing an IFA service - they are simply arranging the contract on an execution only. So the fee paid is not for advice - just for placement.

saverbunny

Debt_Free_Chick wrote: »

The commission is not and cannot be paid back as cash. It's used to reduce the charges inherent in the pension contract.

In an annuity, Cavendish buy on "nil commission" rates, which means the pension paid is increased.

It's just a normal "nil commission, but pay a fee instead" arrangement.

Crucially, however, Cavendish are not providing an IFA service - they are simply arranging the contract on an execution only. So the fee paid is not for advice - just for placement.

Looking at the Cavendish website, in the case of the purchase of an annuity I understand that Cavendish will pay back by cheque the commission received from the insurance company in return for me paying an execution-only fee of £50.

I worked in corporate pensions at a high level so do feel that I can seek out the right annuity without using an IFA.

My understanding is that the commission will be built into the annuity rate irrespective of whether I have a financial adviser or not. This seems totally unreasonable.

In addition, no insurance company that I am aware of is willing to offer annuities on a nil-commission basis if you do not have a financial adviser.
Hence, the hope that I would be able to recover this by using Cavendish on-line.

Further input on this subject gratefully appreciated.

Has anyone used Cavendish on-line for anything?!!

dunstonh

I worked in corporate pensions at a high level so do feel that I can seek out the right annuity without using an IFA.

Problem is that many providers will not deal direct with public but require an IFA to be used. So, you will either have to use Cavendish to get manual quotes on your behalf or you will have to limit your providers.

Looking at the Cavendish website, in the case of the purchase of an annuity I understand that Cavendish will pay back by cheque the commission received from the insurance company in return for me paying an execution-only fee of £50

That is a breach of HMRC rules. Rebating commission as a cash payment on pension contracts is not allowed. Enhancing terms is allowed.

In addition, no insurance company that I am aware of is willing to offer annuities on a nil-commission basis if you do not have a financial adviser.

Correct. They take the cut themselves for doing it themselves. Mainly due to the hassle and the generally low level of commission paid.

Are you looking at immediate vesting personal pension or open market option for the transaction? is it clean terms or will you qualify for enhanced terms or impaired health terms?

saverbunny

dunstonh wrote: »

Problem is that many providers will not deal direct with public but require an IFA to be used. So, you will either have to use Cavendish to get manual quotes on your behalf or you will have to limit your providers.



That is a breach of HMRC rules. Rebating commission as a cash payment on pension contracts is not allowed. Enhancing terms is allowed.



Correct. They take the cut themselves for doing it themselves. Mainly due to the hassle and the generally low level of commission paid.

Are you looking at immediate vesting personal pension or open market option for the transaction? is it clean terms or will you qualify for enhanced terms or impaired health terms?

Open market option, clean terms.

In view of your helpful comments regarding HMRC view on the rebating of commission payments as a cash payment, I would be very grateful if anyone could steer me in the direction of any financial adviser willing to work on a nil-commission fee basis.

We are talking a commission in the region of £2000...

dunstonh

I would be very grateful if anyone could steer me in the direction of any financial adviser willing to work on a nil-commission fee basis.

That would be all IFAs. However, like any retail business, expect the fee to vary. Indeed, you may end up finding out that commission is cheaper than fee with annuity. This is because the commission tends to be 1% and its costed over the whole term of the expected payment period.

Large funds can be cheaper on fee but smaller funds not. If you fund is 260k then fee is probably cheaper but having it deducted using the commission system may or may not be better. Ask the IFA to quote on nil commission with you paying the fee by cheque and with the fee being taken using the commission system to see what difference there is.

That said, if you are after just the basics and using OMO (one pension source) and not IVPPP (multiple pension sources) and dont want anything like value protect, then Cavendish should be fine.