Laughable annuity quotes

mike004

I have a few little pension pots from places that I worked with for 2 or 3 years.
Got a summary from one this week. It's laughable:

Pension pot: £15k
Estimated pension = £30 per month, before tax


That means it would take me over 40 years to "use up" the pension pot! And thats assuming there is no capital appreciation on the pension pot.

Annuities seem to be daylight robbery. What is the point of saving for your retirement if you are going to be ripped off on retirement day?

somethingcorporate

Like with everything else it pays to shop around.

I'd expect you to be able to do considerably better than that although it does depend on the conditions that has attached (uprating, guarantee period etc).

jem16

mike004 wrote: »

Got a summary from one this week. It's laughable:

Pension pot: £15k
Estimated pension = £30 per month, before tax

That's an annuity rate of 2.4% which is pretty poor. What terms were you looking for - ie joint, index-linked etc?

Linton

An annuity of that amount seems very low for someone retiring at a normal age - at what age would it be taken? In any case at those figures it would be inflation linked: at 3% inflation your income would have tripled by the end of 40 years.

mike004

Linton wrote: »

An annuity of that amount seems very low for someone retiring at a normal age - at what age would it be taken? In any case at those figures it would be inflation linked: at 3% inflation your income would have tripled by the end of 40 years.

65 age of retirement.
I don't think it's index-linked. Anyway, it only amounts to a gallon of petrol a week. After paying in for 3 years...

Pension funds are yet another rip off in Rip Off Britain.

Reue

mike004 wrote: »

65 age of retirement.
I don't think it's index-linked. Anyway, it only amounts to a gallon of petrol a week. After paying in for 3 years...

Pension funds are yet another rip off in Rip Off Britain.

3 years is far too short a time to be paying into a pension. Its no surprise the returns are low.

jem16

mike004 wrote: »

65 age of retirement.
I don't think it's index-linked.

It will be at that rate so perhaps you should check.

Anyway, it only amounts to a gallon of petrol a week. After paying in for 3 years...

Pension funds are yet another rip off in Rip Off Britain.

What do you expect after paying in for 3 years? Pensions are designed to be built up over 40/45 years.

Is this your total pension provision or do you have others?

mike004

Reue wrote: »

3 years is far too short a time to be paying into a pension. Its no surprise the returns are low.

Read the OP.

mike004

jem16 wrote: »

What do you expect after paying in for 3 years? Pensions are designed to be built up over 40/45 years.

Is this your total pension provision or do you have others?

It's one of several small pension pots, from places where I have worked for 2 or 3 years.

Regardless of the size of the pot, annuity rates are shockingly low.
Insurance firms are retaining sizeable capital sums and just paying out measly pensions based on gilt investments.
Can they hand over all the pot, please? And I'll buy the treasury stock myself...

jem16

mike004 wrote: »

It's one of several small pension pots, from places where I have worked for 2 or 3 years.

Why not amalgamate them into one larger pot then?

Regardless of the size of the pot, annuity rates are shockingly low.
Insurance firms are retaining sizeable capital sums and just paying out measly pensions based on gilt investments.

Insurance firms are not making a packet on annuities. They are designed to give you peace of mind for however long you live. Some will gain and others will lose, just like any insurance.

Can they hand over all the pot, please? And I'll buy the treasury stock myself...

Nothing to stop you doing that. You don't have to buy an annuity. You can use Drawdown instead.

Proxy

mike004 wrote: »

Insurance firms are retaining sizeable capital sums

...as required by EU and UK legislation to ensure these payments are sustainable. You're aiming your anger at the wrong target.