Laughable annuity quotes

jem16

mike004 wrote: »

If my pot is below 18k, trivial commutation means I can take it as a lump sum. However, I am still taxed on 75% of the lump sum..

Only if the total of ALL your pension pots is below £18k which is why I asked you this earlier.

jem16

mike004 wrote: »

Don't you see my point that annuity providers are walking off with a very large chunk of people's hard earned pension pots?

You don't seem to be reading the replies do you?

If you don't like annuities, don't use them.

auroan

Am I reading this and thinking there are some entries to this thread where people don't understand a Pension is not equal to an annuity ?

Pension = something you save into that can't be accessed until retirement

Annuity = something you buy with your pension at retirement which gives you a guaranteed income each month after purchase regardless of how long you live.

mike004

jem16 wrote: »

If you don't like annuities, don't use them.

Annuities seem to be the default option come retirement day.
The plain fact is that they offer very poor value.

Give someone your 100k, and they only offer you well under 5k a year? That's with no RPI increase.

They have 20 years coverage straight off, without doing anything...

Old_Slaphead

auroan wrote: »

Pension = something you save into that can't be accessed until retirement

Pension = regular payment to retired people (or a small hotel)

Annuity = a predefined sum of money paid at fixed intervals. Doesn''t necessarily have to be anything to do with pension plans.

Pension Plan/Fund = something you save into that can't be accessed until retirement

Old_Slaphead

mike004 wrote: »

Annuities seem to be the default option come retirement day.
The plain fact is that they offer very poor value.

Give someone your 100k, and they only offer you well under 5k a year? That's with no RPI increase.

While there's no doubt that Insurance Cos make a more that decent return on annuity provision

http://www.telegraph.co.uk/finance/personalfinance/pensions/9919183/Pensioners-being-ripped-off-by-profit-margins-on-annuities.html

the chief protagonists in this debacle are the Government, who have so little respect for private provision, the B of E with it's QE policies and the bankers & Labour Party for effectively bankrupting the country.

Linton

mike004 wrote: »

Annuities seem to be the default option come retirement day.
The plain fact is that they offer very poor value.

Give someone your 100k, and they only offer you well under 5k a year? That's with no RPI increase.

They have 20 years coverage straight off, without doing anything...

Fixed Rate Annuity for £100K for someone aged 65: £5750/yr from Canada Life. This doesnt look like "well under 5K" to me.

Its approx 17 years "coverage". Average life expectancy for someone aged 65 now is about 87 so 50% of people are expected to live longer. About 10% are expected to reach 100. So not such a bad deal considering current interest rates.

FatherAbraham

mike004 wrote: »

Annuities seem to be the default option come retirement day.
The plain fact is that they offer very poor value.

No, they offer fair value for money.

The apparently low rates (I'm talking about general market rates, not the incredibly low rate which you opened this thread with) merely reflect the mortality of modern annuitants.

Since annuities offer risk pooling, they're a more efficient way of converting capital into income than doing-it-yourself, which has to err much further on the side of caution when making distributions.

You're not a troll, are you?

Warmest regards,
FA

FatherAbraham

Old_Slaphead wrote: »

While there's no doubt that Insurance Cos make a more that decent return on annuity provision

http://www.telegraph.co.uk/finance/personalfinance/pensions/9919183/Pensioners-being-ripped-off-by-profit-margins-on-annuities.html

There's plenty of doubt that inscos make more than a decent return on annuity products. There's an open market, for one thing.

An article in the personal finance section of a national newspaper proves nothing. Personal finance sections are full of sensationalist nonsense. Anyone who uses them to educate himself is likely to end up poorer.

Warmest regards,
FA

jamesd

FatherAbraham wrote: »

Since annuities offer risk pooling, they're a more efficient way of converting capital into income than doing-it-yourself, which has to err much further on the side of caution when making distributions.

It's more the other way around. Drawdown doesn't have to have certainty of paying out the income forever while an annuity does need that certainty. The increased certainty requirement inevitably reduces payout rate, as normal for investments where there's an inverse relationship between risk and return.

Dropping to 90% of income in drawdown may well be fine. For an annuity provider to do it would be a disaster for the firm, its shareholders and any customers who have very low tolerance for reductions in income.