Advice re which pension company?

hushpuppy

My mum (67 years old) has a pension with the Prudential and the fund value is worth @£20k.

They have written to her offering her the option to buy the following:

1. Guaranteed pension annuity with level income giving £5k tax free lump sum and £934 income per year for 5 years or £923 income per year for 10 years. (No % income increase per year).

2. Guaranteed pension annuity with changing income giving £5k tax free lump sum and £708 income per year for 5 years or £674 income per year for 10 years. (3% income increase per year).

3. Take the Open Market Option

4. Don't take any benefits yet.

Can feedback please be given as to the following please;

1. The performance of Prudential?
2. Is this a good annuity?
3. Suggest alternatives providers?

Ultimately my Mum wants the best return possible on her money.

Kind regards

McKneff

She really would be best getting advice from an IFA. They have access to many funds that us pensioners have not.

We have some pension experts on the board and they will be along to help more.

My own experience is that I went with an iFA, I got a great deal with Just Retirement who only deal with IFAs,

My lump sum was enhanced because of health reasons and also that originally my now money purchase scheme was originally a final salary scheme. They are the experts so came up with things I knew nothing about to get me a better pension.

Frogfish

The annuity is just buying an income for life with the fund available, the performance of Prudential is really irrelevant to this matter.

Although if she plans to delay taking her pension, it would be worth looking at how/where the money is invested.

Does she need the money? As annuity rates are falling, at her age there would be an argument for taking it now anyway.

How is her health (I hope excellent, of course!) But if she does have any health issues, she might get a better deal.

She needs to see an adviser who can search the market and find her the best quote using the open market option. Don't let her just take the deal on the table from Pru.

jamesd

Option 1 £934 is 6.23% of the £15,000 remaining after taking a lump sum. £889 or 5.93% is the best I see in one tool with no guarantee for a woman aged 67 and no spousal pension.

Option 2 £674 is 4.72% of the £15,000 remaining after taking a lump sum. £638 with 3% and five year guarantee is the best I see.

Note that the lookups I did are probably lower because the amount is really higher than £15,000. An extra £750 or so would explain the difference.

Given the numbers I don't think that a GAR applies here, they look like normal rates.

Since they are normal rates her best option is to visit unbiased.co.uk to get an independent financial advisor to take a look, paying with commission. The IFA would quote the income after the deduction of the commission payment.

If her health is anything less than perfect an IFA is also best because substantially larger amounts are available, say to those who are overweight, smoke, drink a lot, have past circulation or heart trouble or anything else that reduces life expectancy.

Prudential is fine as a provider but she can probably get a better deal via an IFA. It is unlikely that there would be sufficient financial trouble to threaten their ability to continue making payments.

CannySaver_2

Hi

I'd concur with the others, although I'd suggest doing some research yourself before you speak to an IFA.

Use an online pension annuity calculator to test some different annuity combinations, using different levels of guarantees, spouses pension, indexation etc and compare the results with the Prudential's quotes; which on the face of it, after sa quick look, seems to be pretty attractive.

If they are GARs though they are not particularly generous compared to others people have posted about on here, although I guess that's a little irrelevent, it's all about getting the most competitive level of income for your mother. Which takes me onto enhanced annuities.

If your mother has any health or lifestyle issues e.g. high blood pressure, smoking, diabities, or god forbid, anything more serious, she may well qualify for an enhanced annuity. To confirm whether or not this is the case she should seek independent advice from an IFA.

If you can't get a recommendation from family or a friend then use www.unbiased.co.uk to find a suitably qualified and experienced IFA to help your mother. Given her fund size I'd contact a couple and confirm their charges up front. The fund size is relatively small after the tax free lump sum has been taken and they may want to charge a fee, which could reduce the income paid to your mother. Don't be put off seeking advice though, the fee may well be worth it in the long run, alternatively I may be being too pessamistic and they may not charge an additional fee.

Hope this helps.

The Canny Saver