Annuity and IFA advice needed

lunaarbelle

Hi i have just had a meeting this morning with an IFA with the purpose of looking into and getting the best, plus arranging an enhanced annuity on a fund of £215,000 which after taking my 25% would be around £160,000 ,this is currently with the Prudential who have sent me the figures of their annuity as it matures in may 2013 on my 55 th birthday.
I have given the IFA these figures and told him to beat these then come back to me .
He says their charges would be 3% (£4800)for arranging this ,is this about right or not , don,t mind paying if so after all its their job and they have trained for years and they can hunt down the best deal for me .

dunstonh

Prudential who have sent me the figures of their annuity as it matures in may 2013 on my 55 th birthday.

It doesnt mature on your 55th. It can "mature" on any age you like between 55 and 75. You dont need to take it at 55.

He says their charges would be 3% (£4800)for arranging this ,is this about right or not

It is high. I would expect £750-£2000 to be he usual range. However, taking a pension at age 55 is higher risk from a liability point of view for the IFA. So, a tad higher than norm would not be unexpected.

Do you need the pension now?

lunaarbelle

Many thanks for replies dunstonh,
i set the pension up many years ago (20 plus)with a one off payment from my another pension and put a commencement date of may 2013 on it ,that is why i am getting all the paperwork from Prudential .
i also have 2 work pensions one of which i am currently paying into through my job .how ever health issues mean i am looking at various options of finishing work earlier than expected .

Once again i thank you dunstonh for your help.

redbuzzard

£4,800 is 3.00000000000% of £160,000.

Coincidence?

jem16

redbuzzard wrote: »

£4,800 is 3.00000000000% of £160,000.

Coincidence?

Of course 3% of £160k is £4,800 - that's what she was told were the charges.

I don't understand what you are getting at?

redbuzzard

jem16 wrote: »

Of course 3% of £160k is £4,800 - that's what she was told were the charges.

I don't understand what you are getting at?

Neither do I, now. There must have been another bit but it escapes me now. I'm quite sure it was very witty though.

Senior moment. Sorry.

jamesd

lunaarbelle wrote: »

health issues mean i am looking at various options of finishing work earlier than expected

Health issues are a big red flag. Do not buy a standard annuity. Someone with health issues that could affect life expectancy should be looking for an enhanced annuity that is likely to pay substantially more than a standard annuity. If buying an annuity at all. But you know this because you're looking for such an annuity already, so that's good.

If the health conditions may get worse it could be best to use a "scheme pension", where an actuary works out life expectancy so that more income can be taken from investments. Such a calculation can end up allowing much higher payments than standard capped income drawdown.

Mummy_Dfw

Have you considered drawdown/ phased drawdown this allows you to take tax free cash and income/no income ( subject to gad limits).

Once locked into an annuity you cannot alter this, drawdown would still allow potential for capital growth.

You can of course leave your fund where it is, you do not have to take benefits now.

lunaarbelle

Many thanks for replies .ive asked the IFA to look into income draw downs as well but i don,t know if they will pay out as much as an enhanced annuity but i am checking on this,
Another question is after the bank holiday i will be contacting the Prudential to see if they do enhanced and draw downs,if they do and they are as good as the results what the IFA comes up with then if i choose to go with the Pru do i still need to use an IFA to sort it out or can i just deal with the Pru .

jamesd

Capped income drawdown may not pay as much as an annuity because standard capped drawdown assumes good health. That's where a scheme pension and its individual actuarial consideration of you specifically comes in.

atush

I agree the fee sounds too high, even if you retire early.

But while you continue to work, I would not take the pension as an annuity. If you want to take the 25% TFLS, then hold off until you actually retire to buy an enhanced annuity.

Do you have a spouse/dependants?