Annuity variations-same provider

marc3

I am on the verge of surrendering my personal pension-taking a cash free sum and the balance of about £35k in the form of an annuity.

My pension provider-L and g have offered me an annuity of about £1050-approx 3% - which is pretty rubbish even in todays market place.

Thus-i have sought an alternative figure from a 'broker'who can achieve about £1800 for me-or about 5.2 %-better but below my goal of 6% but maybe for a relatively small fund of £35000-just about acceptable.

However-what throws me in this is that i get offered £1050 from l and g direct-but via the broker-i get offered £1800 also from L and G.

Now-L and g may wish to 'court the broker' but a difference of £650 (annually) seems amazing to me-and i can't see the logic.

(i have gone back to l and g direct and asked for a better offer-but they stick with the £1050 but again-via the broker, i get £1800 also from L and G.

I'm struggling with the logic of it.
Can anyone provide an answer to how this works out that a broker can offer so much more for the same fund via the same provider.

I have very carefully ensured the quotes are exactly like for like.

i guess its not a complaint-but i just need to understand the logic of it-and have others come across something similar quite regularly.
maybe if the difference was about £100 i could see some sense in it-but a difference of £650 seems enormous to me.

dunstonh

I am on the verge of surrendering my personal pension-taking a cash free sum and the balance of about £35k in the form of an annuity.

For clarification that is not surrendering. It is commencing a pension income or crystallising the pension.

However-what throws me in this is that i get offered £1050 from l and g direct-but via the broker-i get offered £1800 also from L and G.

Now-L and g may wish to 'court the broker' but a difference of £650 (annually) seems amazing to me-and i can't see the logic.

broker is not a term that refers to those that can arrange annuities. It will either be an IFA or an FA. FAs should be avoided as it is limited panel.

It is not unusual for IFAs to get better terms than going direct. Indeed, it is very common. FAs tend to match going direct or be worse.

L&G are not a particular strong enhanced terms provider but are not bad on the standard terms (although they havent come up tops for my cases for a fair while).

Do you qualify for enhanced terms or impaired terms or only standard terms? A quote on standard terms with L&G would be lower than enhanced terms with L&G. Although if you qualify for enhanced terms, you would expect others to come in better.

If it isnt due to enhanced terms then it is possibly not a like for like comparison. Is one quoting on 2011/12 protected rights basis but the other quoting on 2012/13 non-protected rights basis (after protected rights has been abolished)? It could be something like that.

CannySaver_2

Hi

I'd check again that the quotes are like for like, even down to the dates of birth being different.

I reallty cannot see L&G offering 60% extra through a broker, there must surely be something wrong with the quotes.

To help your research, and assuming they are not enhanced annuity quotes, run the figures through an online pension annuity calculator yourself and see what you get.

I guess if they are enhanced quotes your IFA could be putting a better spin on your medical conditions than L&G did directly, but even so a 60% increase is massive.

Hope this helps.

The Canny Saver

marc3

Thanks for replies.

i do know a bit about this (even though my terminology may not be great !!)

i do not qualify for enhanced or impaired.

They are absolutely like for like-and yep-there is a 60% differential which is what has thrown me.

It does'nt particulary affect me as i will just deal with the 'broker'/IFA -hargreaves langdon.

it was simply any comment from people more experienced in this at the amount(60%) of the differential.

dunstonh

It does'nt particulary affect me as i will just deal with the 'broker'/IFA -hargreaves langdon.

Get a local IFA to do it. Past posters have found the local IFA has come up with the best rates.

They are absolutely like for like-and yep-there is a 60% differential which is what has thrown me.

A difference of that size has to be something in the terms. It may not be obvious at first glance but there has to be something wrong.