MSE News: FSA to probe annuities market 'failure'

KFCMike

dunstonh wrote: »

I had a client in December that got an OMO quote from HL. I was able to come in with better terms using the same insurer on the same basis. So, if HL are being moral on this, surely they should warn their customers that IFAs can offer higher annuity rates than them. After all, that is what they are saying the existing providers should do.

I've seen HL quotes paying 5% commission! Needless to say obtaining better quotes with realistic commission rates wasn't difficult.

If you want a good deal avoid the huge bucket shops, their multi million pound advertising campaigns need paying for somehow.

KnitterP

kidmugsy wrote: »

Two of my wife's pension companies have written to her this week. Both pointed out the open market option: to choose it, all she had to do was tick a box.

Choosing the open market option just means NOT buying the annuity your pension provider is offering you. If you are just ticking a box rather than looking into other annuity deals yourself (or through and IFA if your fund size makes it worth it) then you don't know whether you are getting the best deal. Some pension providers have deals with other providers to offer annuities to their customers - whilst technically this is using the open market option it is really just the same as taking the annuity your pension provider is offering.

kidmugsy

KnitterP wrote: »

If you are just ticking a box rather than looking into other annuity deals yourself (or through and IFA if your fund size makes it worth it) then you don't know whether you are getting the best deal.

All my wife had to do is tick a box: then she had to write in which provider they were to transfer the funds to. It couldn't have been easier - there was no malarkey with small print, stuff hidden away in appendices, or the like. I can't see what more these two firms could reasonably do.

Thrugelmir

GhIFA wrote: »

To be fair, they seem to be the "go-to" point whenever a quote is needed in the mainstream media - you can almost guarantee that whenever the press run a pension story there will be a soundbite from HL in there!

My point still stands. As a named source of information is advertising . Often or not in collusion. I.E. please write a piece for us.

Jack_Griffin

dunstonh wrote: »

I had a client in December that got an OMO quote from HL. I was able to come in with better terms using the same insurer on the same basis. So, if HL are being moral on this, surely they should warn their customers that IFAs can offer higher annuity rates than them. After all, that is what they are saying the existing providers should do.

What % increase did you get?

Is there any reason why a private individual can't go to a pension provider direct?

This looks like it may be helpful. http://pluto.moneyadviceservice.org.uk/annuities. compares quotes from several leading pension providers based on minimal personal info (age, postcode etc.)

Aviva also have a calculator that includes to option to disclose some health details, which at the end proivides a quote. https://www.aviva.co.uk/ric-tool/

jamesd

kidmugsy wrote: »

I can't see what more these two firms could reasonably do.

Perhaps provide the top three quotes from some public database for standard annuities and for a few of the most common reasons for enhanced annuities being payable. Say diabetes, circulatory disease, obesity and smoking. Maybe actual numbers would encourage action.

dunstonh

What % increase did you get?

Existing scheme annuity rate was 3.79%
HL was 4.88%
I got 5.48% (using the same company HL quoted)

Is there any reason why a private individual can't go to a pension provider direct?

Yes. Most of them do not hold FSA permissions to retail direct to consumer. Plus, you miss out on the haggle.

This looks like it may be helpful. http://pluto.moneyadviceservice.org.uk/annuities. compares quotes from several leading pension providers based on minimal personal info (age, postcode etc.)

Helpful yes. But it is unreliable as it is based on limited assumptions and doesnt factor in economies of sale pricing that some providers give.

Aviva also have a calculator that includes to option to disclose some health details, which at the end proivides a quote. https://www.aviva.co.uk/ric-tool/

emphasis on "some health details". Aviva can come out well priced on standard health cases but rarely on enhanced terms.

kidmugsy

jamesd wrote: »

Perhaps provide the top three quotes from some public database for standard annuities and for a few of the most common reasons for enhanced annuities being payable. Say diabetes, circulatory disease, obesity and smoking. Maybe actual numbers would encourage action.

What, as part of a general law that all businesses draw the attention of the potential customer to the offers available from the competition?

kidmugsy

dunstonh wrote: »

Existing scheme annuity rate was 3.79%
HL was 4.88%
I got 5.48% (using the same company HL quoted)ing that some providers give.

Have you got a rule of thumb, dunstonh, on the size of pot that might justify a customer using an IFA for this task?

dunstonh

kidmugsy wrote: »

Have you got a rule of thumb, dunstonh, on the size of pot that might justify a customer using an IFA for this task?

I wouldnt want to put a figure on 27,000 different IFAs business models. However, many of the providers require the residual pension pot after tax free cash to be in excess of £10,000. I would say something around the £15k plus after tax free cash mark. The more you have, the more beneficial an IFA should be (especially where fixed fee pricing is used rather than percentage rates).