Annuity

wendy42

Hi im desperate for a bit of advise, i have recently lost my Husband and he did everything financial, My Husband took out an early pension to live on as he could not work due to terminal illness, The pension was with Axa, they would not let him withdraw all of it, as they wanted to leave some in for me on the death of my Husband in the form of an annuity. I must admit i didnt even know what this was. The amount is not large for an Annuity i think its £14,000.00. I am going through probate at the moment and my solicitor as advised me i can to stick with Axa (Fixed Rate) or i can take it on the open market and see if i can get a better deal. Pheww i just dont know. If i was to put it into an Index Linked Annuity would i be better of, do you think i should add to it, if so i cant until probate has gone through as i dont have immediate funds, is this a problem? I just need some solid advice, it would be really appreciated.

peterg1965

Wendy, sorry to hear of your loss and your predicament. You need to be aware that you will not get advice on this forum, that is strictly not allowed and can only be given by qualified financial advisors. Suffice to say that there are a variety of options open to you as your solicitor has informed you. I would suggest you use the website www.unbiased.co.uk to find an Independent Financial Advisor (IFA). The first appointment is generally free of charge.

dunstonh

Sorry for your loss.

The pension was with Axa, they would not let him withdraw all of it, as they wanted to leave some in for me on the death of my Husband in the form of an annuity.

That sounds like he had protected rights on his pension. If so, that means there has to be a provision for spouse (at the time of writing this as it is expected to change in the coming years). Its not the choice of AXA but a legal requirement.

. I am going through probate at the moment and my solicitor as advised me i can to stick with Axa (Fixed Rate) or i can take it on the open market and see if i can get a better deal.

Your solicitor is almost certainly not qualified or authorised to give that sort of advice. Very few solicitors are nowadays. Its a bit like asking an IFA to give legal advice. So, they will just tell you the options. They wont tell you which is best. You need an IFA for that. AXA are not known for their decent annuity rates and if you have the open market option available then you should at minimum get an IFA to find out if they can do better than AXA. There are some older AXA plans that do have guarantees on them. They tend to be Section 226 retirement annuity contracts or on Section 32 buy out bonds. (names mentioned in case you see that on your paperwork).

However, the way you describe the pension, it sounds like it was already commenced. So, in those cases, the open market option would not be available.

I just need some solid advice, it would be really appreciated.

As peter says above, the forum is not allowed to give financial advice and even those of us that are authorised to do so in real life cannot do so on the forum as you cant meet advice requirements. What you see here is discussion, opinion and comment only. So, consider what we say as pointers and not advice

If you need advice then get a local IFA to look at it. First consultation is free and if they can beat the AXA pension, then the new company will pay the IFA. If they cant beat AXA then AXA will pay the IFA. So, basically its a no cost option for you and you get the admin and best price sorted for you.

wendy42

Hi Thanks for your replies, The choice i have been given is to stick to Axa, Axa have also said i can place it on the open market if i feel i can get a better deal, I have heard people talk about index linked not really sure what it means and i wander if this would be my best option. I will have to go and see an IFA.

zygurat789

The lump sum left in the pension pot is used to buy an annuity which can be either a fixed rate or indexed. You may buy either from any supplier of such products ie on the open market, your choice may be Axa if it gives the best rate.
The fixed rate is fixed for life and will, therefore, decline in value if inflation increases. The indexed annuity will increase, usually by a set amount, each year but the initial annual amount will be considerably less than a fixed rate annuity.
The answer is, as when buying and large item, get some quotes and see.

sleepless_saver

I am sorry for your loss.

I can't help with your query, but I thought I would mention that depending on your age and when your husband stopped work, you may be eligible for bereavement benefits from the state. Bereavement payment is a lump sum of £2000, and bereavement allowance is a weekly payment which varies with age and lasts for a year.

Apologies if you have already checked this out, but not everyone seems to know about these benefits. If you phone Jobcentre Plus 0800 055 6688 and ask for info/forms for bereavement benefits they should be able to help. It is important to apply as soon as possible as there are time limits.

One big advantage of these benefits is that they are not dependent on probate.

jamesd

You should visit unbiased.co.uk and get an IFA to check the rates that are available via the open market option. The open market option is almost always the way that buys most annuity for the pension pot money being spent. People not using it are generally throwing away a significant amount of money.

An IFA can also explain the different types of annuity. An index-linked annuity is the one that is likely to provide you with a higher income over the rest of your life, by increasing with inflation (up to either 3% or 5% depending on which option you choose). It'll start out paying less than one without index linking and gradually catch up and pass it over time.

If you have any health issues, from being overweight through smoking or having heart trouble or anything else you should definitely use an IFA because there are annuities called enhanced annuities that pay out more to people who have any of a wide range of conditions that might affect how long they will live. Checking your possible eligibility for one of these will be why an IFA will ask you questions about your health.

wendy42

mmm, thankyou all thats food for thought, i feel as though maybe i will be better adding to the pot maybe and having an index linked, i have been in touch with a financila adviser today, and hopefully he will point me in the right direction, im just a bit of a worryier and have not dealt with such issues before,it feels a bit scary,as for the benefits i did receive the £2000,00 one off payment after researching the internet, which helped go towards funeral costs after, i am not entitled to the bereavement benefit as i am under 45 years old, i dont understand how they put an age on these things. Unfortunatly i still have a large mortgage on the house, which has just been sold and i shall move into a more economical house, we did not take out critical illness cover. i sold quickly so i am gratefull for that. Thankyou all for your advise.

sleepless_saver

Wendy42 wrote: »

Unfortunatly i still have a large mortgage on the house, which has just been sold and i shall move into a more economical house, we did not take out critical illness cover.

I can understand that you might not have taken out critical illness cover, but did your lender not insist on life cover when the mortgage was taken out?