Options to take on my pension, help/advice welcome

AlanWragg

Thanks for replying,

I don.t understand how it will be cost neutral to use an IFA? it will cost £1000 - £1500 that I wouldn't otherwise be paying or have I missed something?

Will an IFA give me a quote of what annuity he can get me before I have to pay?

Can any IFAs give me any indication of what they can get me?

I am in good health, 65 in Feb, want RPI increases, 50% spouse (65 Nov 12. good health) and 5 year guarantee. Both non smokers.

I don't mind spending a reasonable amount to get a better annuity deal but don't want to pay out and not get a deal that is any better.

jem16

AlanWragg wrote: »

I don.t understand how it will be cost neutral to use an IFA? it will cost £1000 - £1500 that I wouldn't otherwise be paying or have I missed something?

Yes you have missed something.

The cost of commission is built into any quote even if you go direct to the company providing the annuity so you pay it regardless. If you use an IFA the company pays the IFA the commission, if not they keep it for themselves.

An IFA will be able to get you a better quote than anything you can get yourself.

AlanWragg

Will an IFA rebate any of that commission? is it normal for an IFA to keep the full amount?

Is £1000 - £1500 pounds worth of work involved in buying an annuity?

I really am Honestly beginning to wish I had never put a penny in a pension.

Poor value annuity, loose the lot when you and spouse die (after guarantee period). Absolutely Crap!

From the insurance companys own figures if they invest my money they will be getting 4% - 9% pa after inflation and charges.

Strikes me DC pensions suit the providers and the rest of the financial services who seem to view them as a cash cow!

Any young people out there think long and very hard before committing any money to a pension, unless your employer is chipping in about 20% I reckon you will be better in cash ISAs at least your money is yours then.

Strikes me my generation have been duped!

Keep control of your own money! £4200 per year for £137,000 and loose the lot when you both die! Can't believe it!

ajbell

whats to stop you saying you are a smoker to get a better income?

jem16

AlanWragg wrote: »

Will an IFA rebate any of that commission? is it normal for an IFA to keep the full amount?

How much commission is rebated will depend on what fee you agree with the IFA. If the fee is less than the commission then it will be rebated but by way of enhancing the annuity.

Is £1000 - £1500 pounds worth of work involved in buying an annuity?

Around 6 to 10 hours of work? Yes I would imagine it does take that. It's more than just finding an annuity quote. The IFA has to make sure that it is the most suitable option to take.

Poor value annuity, loose the lot when you and spouse die (after guarantee period). Absolutely Crap!

Then don't use an annuity. It's not the only option available. You can use Income Drawdown.

From the insurance companys own figures if they invest my money they will be getting 4% - 9% pa after inflation and charges.

Then keep the pot invested yourself and use Drawdown.

Keep control of your own money! £4200 per year for £137,000 and loose the lot when you both die! Can't believe it!

You really do need to use an IFA who may be able to explain the different options available to you and allow you to make an informed choice. You seem to have just decided on an annuity without looking at other options.

atush

anthonysimpson, don't know about you but i'm wondering if I've been a total mug and should have stuck my money in savings accounts / ISAs.

I really am Honestly beginning to wish I had never put a penny in a pension.

Poor value annuity, loose the lot when you and spouse die (after guarantee period). Absolutely Crap!

you are missing so much here I am not sure where to begin.

Savings/Isas. you could (and should) have had these alongside your pension anyway. But given every 100 in your pension only cost you 60-80 (depending on your tax rate) your savings/isas would have had to make up ALL that LOST ground before outperforming.

Extremely unlikely for 2 reasons. If you were a skilled enough equity investor to outperform, your pension would have grown/outperformed as well- as it is YOU not the pension company that chooses the investments in most cases. Then, if you were a cash investor, you would have struggled just to meet inflation much less earn more than inflation (plus the tax you pay).

You are struggling with teh 1000-1500 fee, fOrget it, as you will pay it which ever way you go. At least with an IFA, you will get a better anuity out of it than you can get yourself. aS they can search providers who don't sell to the general public (ie you) and can 'haggle' to get you more quid per month after the first 'quote' which you would have taken.

Lastly, you don't have to buy an annuity (with a pricy spouse pension) as you can go the drawdown route. Which means your spouse would inherit 100% of the remaining fund to use for her pension after your death.

dunstonh

I don.t understand how it will be cost neutral to use an IFA? it will cost £1000 - £1500 that I wouldn't otherwise be paying or have I missed something?

Commission on the annuity is in the same range. So, they cancel each other out.

Will an IFA give me a quote of what annuity he can get me before I have to pay?

Some will, some will not.

I don't mind spending a reasonable amount to get a better annuity deal but don't want to pay out and not get a deal that is any better.

The IFA will come in with the best figure. So, dont worry about it.

Will an IFA rebate any of that commission? is it normal for an IFA to keep the full amount?

No. It is against HMRC to rebate commission on pension products. It would be treated as an unauthorised payment. The IFA will either take commission to amount of the fee or offset it against the fee. Any surplus will be used to improve the annuity rate.

Is £1000 - £1500 pounds worth of work involved in buying an annuity?

Yes. Although you can do it yourself and let the pension provider keep the £1000-£1500 for themselves for doing even less. Plus, you dont get the full provider range that an IFA has.

Poor value annuity, loose the lot when you and spouse die (after guarantee period). Absolutely Crap!

If death benefits are a concern then choose an option with better death benefits.

Strikes me DC pensions suit the providers and the rest of the financial services who seem to view them as a cash cow!

You can see from your posts and the answers that you dont understand the situation. So, you are not really in a position to make that sort of judgement.

Any young people out there think long and very hard before committing any money to a pension, unless your employer is chipping in about 20% I reckon you will be better in cash ISAs at least your money is yours then.

That would be an awful option for young people. Why would you encourage young people to do such a thing?

Keep control of your own money! £4200 per year for £137,000 and loose the lot when you both die! Can't believe it!

Again, you are not talking from a position of knowledge and making incorrect assumptions.

xylophone

Have you thought of a SIPP?
http://www.pensionsandannuities.co.uk/Capped_Drawdown.htm
http://www.hl.co.uk/pensions/sipp
http://www.sippdeal.co.uk/Sipp/Offer/?wt.mc_id=10390&utm_medium=cpc&gclid=CPqNu76is7MCFUbKtAodCSYAqw

dunstonh

ajbell wrote: »

whats to stop you saying you are a smoker to get a better income?

being prosecuted for fraud when found out is a pretty good incentive not to.

jem16

ajbell wrote: »

whats to stop you saying you are a smoker to get a better income?

Perhaps the fact that it's dishonest if you aren't?

Some companies may check.