Advice on buying pension annuity please.

Anjolale

Hi I am new to the forum and hoping I can obtain a little advice.

We have finally reached our official retirement year and are finding it all very mind boggling.

I am lucky enough to have a small civil service pension there was nothing for me to do just retire as it was all sorted for me. However in my husbands case it is all so confusing. To put it in a nutshell he has a pension pot of £83,025.38. I am not sure if I am allowed to mention companies by name so will not at this point.
We have received a quotation which has been broken down into two parts.

£35.716.79 is The Protected Rights Retirement Pension
£47,308.59 is Voluntary Contribution Retirement Pension

He also has a small pension pot with another company amounting to £6704.18

I also have a small pension pot with the same company amounting to £14,424.00.

I have scoured the internet trying to find answers to specific questions and feel totally overwhelmed with it all, I think I understand but then find something else to make me doubt my understanding.

i.e The open market option am I supposed to ask other companies for quote?
Can all my husbands funds be lumped together. These are just two of the questions buzzing round my head:eek:

We think we should be seeking advise from a financial adviser but again don't know where to start. Also I would like to do a little research first so I have something to work on when we do seek advise.

Thank you for taking the time to read this.

jem16

Anjolale wrote: »

We think we should be seeking advise from a financial adviser but again don't know where to start. Also I would like to do a little research first so I have something to work on when we do seek advise.

Thank you for taking the time to read this.

In the case of buying an annuity using an Independent Financial Adviser is the best option. If you have no recommendations go to https://www.unbiased.co.uk and find one in your area.

An IFA will be able to search the open market for you and get you the best deal. He/she will also know if the 2 pots will be best put together or not. You can search the Internet yourself but most of the best deals are only available through an IFA and the IFA can haggle with the provider and get a bit more as well. Costs for the IFA can be met through the commission paid by the provider ( you would pay this anyway if doing it on your own) or by paying a fee and getting an enhanced annuity.

It's really a no-brainer option to use an IFA. Make sure it is an IFA and not an FA.

Anjolale

Hi jem thanks for your information much appreciated, I have looked on Unbiased and it only lists one in our area, are there other trusted sites? One other question why would a fee give you a better pension or am I interpreting that wrong. We are both at the moment fit and health by the way so would not attract any pension increase due to ill health.

jem16

Anjolale wrote: »

Hi jem thanks for your information much appreciated, I have looked on Unbiased and it only lists one in our area, are there other trusted sites?

Unbiased is the main one and it lists all IFAs. However in one of the questions the default option is to only show IFAs who have a website. Untick that option and it should show up more options. Most smaller local IFAs don't have their own website.

One other question why would a fee give you a better pension or am I interpreting that wrong. We are both at the moment fit and health by the way so would not attract any pension increase due to ill health.

The commission paid to the IFA is paid for by a reduction in the annuity payment. If you pay a fee there is no reduction so your pension is higher. Whether it's better to pay by fee or commission depends on the amount in the pension pots but I'm not sure which yours falls into.

atush

Are you sure you want an annuity for your husbands total pot of all pensions? He could use a drawdown plan which has a side effect of giving you 100% survivors benefits (which is an expensive bolt on for an annuity).

dunstonh

I have looked on Unbiased and it only lists one in our area,

The search has a tick box that defaults to only showing those IFAs that have paid to have an entry. If you untick that box then it will show that that have not paid. Also, be careful you havent over filtered the options.

xylophone

http://www.censusfinancial.co.uk/News/The-end-of-Protected-Rights might be of interest.

Anjolale

Atush re drawdown plan from my research I understood you needed at least £100,000 in your pot and also there is sone element of risk we are not prepared to take.

dunstonh and xylophone thank you I will check out both points

xylophone

Just another thought - have you factored your state pensions into your retirement plans/obtained forecasts?
http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/StatePensionforecast/DG_10014008

Anjolale

xylophone I have just had a quick read through I think I understand and as I have quite a good pension myself I think that would benefit us as we do not want to provide for spouse. I doubt we would get it sorted before April anyway as we still have to find an IFA and decide where to go from there. I am finding this really interesting thank you.

atush

You can get Drawdown for much lower amts- it all depends on the firm.

But as you now say your pensions are balanced between you and have no need of spousal pension that will help you.

But do remember there are all kinds of risk, and annuities carry a BIG risk, esp level ones as their buying power falls every year you live and can be worth next to nothing in 30 years. Also, annuity rates are present are at an all time low.

If you invest in certain things within your drawdown pension, that can mitigate risk.