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Pension annuity rate

My pension provider has informed me that my pension fund has a guaranteed annuity rate of 9.25%. Would this be considered as a good rate when compared to other rates on the open market. I don't know whether to accept this rate or look for what may be a better rate. Does anyone have any experience of what annuity rates could be achieved? I know this may vary depending on age, health etc, but what would be a typical rate on the open market?
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Comments

  • Are you having a Laugh?
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    edited 22 August at 4:08PM
    [quote=[Deleted User];discussion/3513397]what would be a typical rate on the open market?[/QUOTE]

    Unless you're very old or in very bad health, half to a third of what you've been quoted.

    It sounds like you are very lucky and should bite their hands off.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Are you having a Laugh?
    No I wasn't, but after the reply from Gadgetmind, I think I have every good reason to laugh. I had no idea that my pension had a guaranteed rate and it came as a big surprise. I thought that I would not be able to better it, as all enquiries were coming up with 4-5% at the most, but I wasn't sure that my enquiries were extensive enough. So it's nice to have some reassurance from contributors on this site.
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    You are very very lucky indeed.
  • Probably only applies to you the annuitant. In which case the annuity would cease on your demise, leaving nothing for a spouse/partner.
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    fairleads wrote: »
    Probably only applies to you the annuitant. In which case the annuity would cease on your demise, leaving nothing for a spouse/partner.

    IT may or may not. No way to tell, the OP must investigate on their own. Nice if we knew the outcome as always though.
  • fairleads wrote: »
    Probably only applies to you the annuitant. In which case the annuity would cease on your demise, leaving nothing for a spouse/partner.
    Your assumption is quite correct. The rate quoted is for a single life level annuity. If I include my partner or have any payment guarantees, the rate drops significantly. I need to decide whether to pay an IFA to see if he can get me better rates, but my own enquiries on websites have led me to believe that I will not be able to achieve a higher rate - which leads me to believe that any money I pay to an IFA may not be cost effective. Any advise please.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    edited 22 August at 4:08PM
    [quote=[Deleted User];47263845] If I include my partner or have any payment guarantees, the rate drops significantly.[/QUOTE]

    How significant is that change for adding partner and/or escalating annuity?

    If you do go for the GAR offer (and I can't see you being able to beat it) you'll need to ensure some of the up-front pension gets saved to cover later years when inflation has eroded the value of your pension.

    This can be done via ongoing contributions to another pension, which can have tax advantages, but only if the tax situation is favourable. For instance, if your partner is likely to be a non tax payer, you could recycle some of the initial excess into a fresh pension for them.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • gadgetmind wrote: »
    This can be done via ongoing contributions to another pension, which can have tax advantages, but only if the tax situation is favourable. For instance, if your partner is likely to be a non tax payer, you could recycle some of the initial excess into a fresh pension for them.

    Its called churning - typically advised by IFAs to increase/continue their income stream at your expense.
  • gadgetmind wrote: »
    How significant is that change for adding partner and/or escalating annuity?

    If you do go for the GAR offer (and I can't see you being able to beat it) you'll need to ensure some of the up-front pension gets saved to cover later years when inflation has eroded the value of your pension.

    This can be done via ongoing contributions to another pension, which can have tax advantages, but only if the tax situation is favourable. For instance, if your partner is likely to be a non tax payer, you could recycle some of the initial excess into a fresh pension for them.
    Thank you gadgetmind - I'm leaning towards accepting the GAR and your reply has somewhat encouraged that thinking. You are correct in suggesting securing for inflation in later years, and to this end, I thought I would invest in a life policy or an investment ISA in my partner's name. I'm concerend that if I were to invest in a further pension for him, if he were pre-decease me, I may lose the investment or at the very least, may not turn out as a sound investment.
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