Choosing a pension provider

Proxy

Multiple policies can lead to a lower payout, unfortunately... usually due to extra administration fees of setting up multiple policies. But then that's the cost of spreading risk, i guess.

jamesd

bobone, the key tale in that was an actuary with a large pot who decided to buy lots of small annuities on the basis that annuity providers correlated larger pot sizes with increased life expectancy due to the nature of the people who are likely to have accumulated large pots. Buying many smaller annuities ended up paying out more money in that case.

There can also be comparison table sweet spots where providers pay more for certain specific values just to look good in the tables.

Proxy is right about increased costs per policy so it isn't necessarily going to be better. Just something to consider and check.

Proxy

You're not wrong jamesd. It depends on your fund size really.

Splitting 50k or 100k multiple ways will likely reduce your pension size. Splitting £500k or 1m might increase.

But it's different for everyone. Just explore every opportunity you can.

bobone

Proxy wrote: »

Having Equity Release and Annuities works quite well in the same business actually.

.......

Cash flows are almost equal and opposite and the risks are hedged against each other. Therefore a source of funding and profit generation are easier.

Sorry Proxy, I can only accept this point of view where equity release is tacked on to a much larger vehicle. In cases where cash flows are in balance I would seek reassurance that my 40 years of saving were invested in fusty old gilts, not property.

Proxy

The truth is that although gilts are often named as the source of investment for annuities, only a very small proportion is actually invested in gilts.

The majority of investment return comes from corporate bonds, commercial mortgages & equity release. If they weren't, rates would be much lower. JR will have a spread of investments and not just ER.