Preparation for F/A ref Annuity

workingboy

I want to sort an annuity with a Financial adviser.

What information do I need to prepare for her/him besides the pensions I have. The annuity I expect be will joint for myself and my wife unless otherwise advised.

Thanks

Linton

What % for wife after your demise?
Inflation linked or fixed rate?
Do you or your wife have serious medical problems?
Do you want to take the 25% tax free option?

It sounds like you have decided that you want an annuity rather than drawdown - OK its your choice. But do you want him to advise whether this is the best course of action? Drawdown does have advantages as current annuity rates are unusually low, and also can be a more efficient/flexible way of arranging the wife's pension.

Nearly_Old

workingboy wrote: »

I want to sort an annuity with a Financial adviser.

What information do I need to prepare for her/him besides the pensions I have. The annuity I expect be will joint for myself and my wife unless otherwise advised.

Thanks

I've just been through the process with my IFA who was very thorough so we ended up taking around 4 months from start to finish.

Firstly we completed an updated draft of our retirement budget, details of my pension funds and a list of our other savings and investments. Our IFA provided a report to show whether we had sufficient funds to achieve what we wanted to (luckily we had) but if we hadn't have had sufficient funds he would have recommended alternative strategies to achieve the funds we needed. We then had a discussion to decide annuity vs drawdown and our IFA made a few useful comments on our draft retirement budget.

I then completed a standard questionnaire for the IFA who then approached a number of annuity providers. I did do this thoroughly as I didn't want any possible queries in the future over the information provided. Having got the initial quotes our IFA prepared another report and after discussion negotiated further with 2 of the annuity providers. I sent the IFA updated values for the pension funds each month so he was aware of any changes.

Having chosen an annuity provider I then had to complete their own application forms that had slightly more detail than the standard form. I went with a 10 year guarantee, 50% spouse benefit but no escalation as fortunately we have other indexed pensions that cover our base budget.

I'd recommend giving your IFA as much information as possible and as the process goes along keep him/her updated with any changes in values.

dunstonh

I want to sort an annuity with a Financial adviser.

Best to avoid FAs with annuity purchase and stick to IFAs. Some FAs have more recently entered the market with limited panels but they cannot do the same job as an IFA.

workingboy

thanks all,

Yes I meant I'm going to a local IFA, not a FA.

As novice with all this and preparing for a visit.

Can anyone explain in layman's term what the difference with Annuity and Income Drawdown and do either besides being a joint for my spouse, be passed to our children once we both pass on.

I know the IFA will explain all, but just want to know alittle before hand.

thanks

atush

Basically, an annuity is something you buy with your pot and once bought- that's it. You have no more investment risk. But you can't change things either.

With DD, the pot (or 75% of it if you take the lump sum) remains invested however you choose and you take an income from it. That income is either set by govt calculatiuons of the GAD (kind of like a basic level annuity) or it can be flexible in that you can draw as much or as little as you like (if you have 20K of other pension income). It can be left 100% to your spouse, and 45% of it to other relatives/beneficiaries. You can also change your mind and buy an annuity later with it.

CannySaver_2

atush wrote: »

It can be left 100% to your spouse, and 45% of it to other relatives/beneficiaries. You can also change your mind and buy an annuity later with it.

Unless I am mistaken the lump sum option on death, is always taxed at 55% whether it is left to a spouse, child or other financial dependent. If however the spouse opts to take an income directly from the Drawdown fund, or indeed buy an Annuity then this is not subject to the 55% tax charge, although the income may be subject to income tax.

Feel free to correct me but I think I'm right.

Regards

The Canny Saver

dustyjack

Money Advice Service site gives a helpful lot of info you can go through.

There's also comarison tables for annuities too.

atush

yes, by 100% I meant they would get 100% if they left the money and took DD with it. But all other beneficiaries would have to pay 55% of it in tax.

This 100% feature to a spouse is what can make it such a good deal over annuities as to buy even a 50% spousal pension with your annutiy is very expensive and can halve your intial income.

Playing around with annuity calculATORS can really help focus your mind on what things actually cost.

CannySaver_2

atush wrote: »

This 100% feature to a spouse is what can make it such a good deal over annuities as to buy even a 50% spousal pension with your annutiy is very expensive and can halve your intial income.

Playing around with annuity calculATORS can really help focus your mind on what things actually cost.

Agree with you on playing around with pension annuity calculators but not about how expensive a spouse's pension is. It really is not as expensive as dropping the initial income by half, I did a few quotes to compare on the calculator given in the link above and adding in a 50% spouse's pension reduced the starting income by between 5% and 10%, no where near half.

The Canny Saver

workingboy

OK,

Last question before my meeting next week with a IFA.

So I don't get the wrong idea about what I am looking at with these calculaters. Am I correct to think the Value of a pension shown on the summary statement from my pension provider is the value I use, to find an idea of what various companies can offer with the various options ie: No guarantee, 5year-guarantee, 10year-guarantee, individual and joint etc.

thanks