Annuities - why?

stinktankcynic

If further q/e takes place and interest rates fall, how low can annuities go?
It seems a bit of a scam to have a pension pot of money, where you have to go to an insurance firm where annuity rates are falling. If your in receipt of the state pension above means testing, why on earth can't the cash be paid into a tax free, interest account and then paid out to you in full over 10,15, 20 years.. Taxed.
I don't see why insurance firms have to profit from your savings/pensions?
Apart from current 25% lump sum and income drawdown. It seems a nice little earner for the annuity providers.

grey_gym_sock

(a) you don't have to buy on annuity. you can use drawdown.

(b) annuity rates have fallen not because insurance companies are maker more money from them but because the yields on gilts have fallen.

(c) though, for many ppl, it is a bad idea to buy an annuity at the moment, it's not a bad idea just because insurance companies make a profit from it. the aim should be to maximize the usefulness of 1's pension fund to 1self, not to minimize its usefulness to anybody else.

bilbo51

stinktankcynic wrote: »

I don't see why insurance firms have to profit from your savings/pensions?

If insurance firms didn't make a profit, why on earth would they be in business?

You don't seem to understand insurance full stop. If you die early, then what would otherwise have been paid to you goes to pay the annuities of those who survive you. And vice versa. It's the same with your motor insurance. You have to pay your premiums even though you don't make a claim because the claims of other motorists have to be paid.

This has already been explained to you before on your other threads though, so I bet you still don't get it.

dzug1

stinktankcynic wrote: »

If you're in receipt of the state pension above means testing, why on earth can't the cash be paid into a tax free, interest account and then paid out to you in full over 10,15, 20 years.. Taxed.
.

Give or take a few knobs and whistles that's exactly what an annuity is. Except it's guaranteed for life

dunstonh

If further q/e takes place and interest rates fall, how low can annuities go?

Not far. Although the trend with annuities at the moment is upwards.

It seems a bit of a scam to have a pension pot of money, where you have to go to an insurance firm where annuity rates are falling.

It isnt a scam, not even close and you dont have to buy an annuity.

If your in receipt of the state pension above means testing, why on earth can't the cash be paid into a tax free, interest account and then paid out to you in full over 10,15, 20 years..

Annuity rates are higher than savings rates and guaranteed for life. Savings accounts are not. Although you could do that within an unsecured pension arrangement if you really wanted to. Although not many would consider it a good idea.

I don't see why insurance firms have to profit from your savings/pensions?

Move to China or North Korea then. You have to eat. So, should supermarkets profit on food sales?

Apart from current 25% lump sum and income drawdown. It seems a nice little earner for the annuity providers.

Its hardly a nice little earner. If it was, there would be more annuity providers. Indeed, annuities were partly responsible for many of the insurers having to close their doors and/or sell their book.

It appears you know very little about annuities and pensions. This is your second thread on teh matter and you seem to do nothing but complain about them. Yet despite people giving you correct information and trying to put you right on your misconceptions, you choose to ignore them and create a new thread with the same rant.

kidmugsy

Oh, come on Dunstonh, it's his festering resentments that keep him warm.

sandsy

stinktankcynic wrote: »

why on earth can't the cash be paid into a tax free, interest account and then paid out to you in full over 10,15, 20 years

And who would administer this account for you and not want to make anything out of it for themselves?

And what if you lived for longer than 20 years?

bigadaj

Not so sure about moving to china to avoid insurers, it's probably easily many of the big operators main market for growth for their business.

When people see annuity rate barely beating savings accounts (or at least rates available on savings accounts until very recently) then it is understandable that it looks like a ripoff.

The answer is to shop around, get a number of quotes, use an ifa and ultimately compare with drawdown if you are confident you can beat the quoted annuity rate, which is not difficult in many instances currently.

atush

sandsy wrote: »

And who would administer this account for you and not want to make anything out of it for themselves?

And what if you lived for longer than 20 years?

I presume he expects it to grow on the Money Tree (as do my 3 children)