Regular checks for possible annuity?

SallyG

http://blogs.telegraph.co.uk/finance/ianmcowie/100010610/at-last-some-good-news-on-pensions/
"Billy Mackay of SIPP specialists AJ Bell added: “Savers who opt for drawdown will need to be clear about whether their pension plan is likely to be their primary source of income.
“They will need to understand the overall resources that they will have and need in retirement. They must consider the rate at which income is likely to be taken from the fund allowing for market conditions, the likely investment performance of the portfolio and the charges levied by the product provider.
They should regularly check to see if the annuity rate conditions and rates available are changing.” "


How do we do that ?

jamesd

By checking online annuity comparison sites or the newspapers that regularly produce update lists of what annuity a certain amount of money can buy.

If adverse health factors exist then an IFA would be needed to check because the rates for those plans are only really available via IFAs. The trends in those will be similar to the ones for other annuities so the standard annuities can be used as a reasonable check for trends.

Loughton_Monkey

SallyG wrote: »

http://blogs.telegraph.co.uk/finance/ianmcowie/100010610/at-last-some-good-news-on-pensions/
"Billy Mackay of SIPP specialists AJ Bell added: “Savers who opt for drawdown will need to be clear about whether their pension plan is likely to be their primary source of income.
“They will need to understand the overall resources that they will have and need in retirement. They must consider the rate at which income is likely to be taken from the fund allowing for market conditions, the likely investment performance of the portfolio and the charges levied by the product provider.
They should regularly check to see if the annuity rate conditions and rates available are changing.” "

How do we do that ?

Fairly obvious that this needs to be done, really. There are plenty of lookups for current annuity rates. They are accurate enough for this purpose, I'm sure.

The annuity rate is an extremely good guide to what it costs the annuity company to pay you the income, based upon (a) a modest profit to them, and (b) 'safe' bond yields. The cost of underwriting longevity is insignificant to the annuity provider, since this automatically happens from the 'law of large numbers'.

A 'single' drawdown taker has no way of underwriting longevity. Instead, you can only rely on (a) superior investment performance overall, and (b) your drawdown and investment charges being less than those taken by an annuity provider.

CannySaver_2

Hi

Checking annuity rates is pretty simple, use a free pension annuity calculator such as this one. Many Annuity comparison sites are simply a way of collecting data and getting an adviser to call you, this one however lets you get the quotes yourself.

If you are looking to see whether you qualify for an Enhanced Annuity however this is more complicated as the range of conditions that the Annuity providers will accept as qualifying for an enhancement varies from company to company. Most IFAs though will be happy to get you a quote based on your current medical situation, however this is more complex and calculators don't really work for Enhanced Annuities.

The Canny Saver

dunstonh

There are about 12 things that need to be done on an annual drawdown review. Comparison with annuity is just one of them.