Shopping around for an annuity............

SallyG

http://www.dailymail.co.uk/money/pensions/article-2306438/The-day-delay-knocked-16k-Brians-pension.html

"......The problem is major annuity providers such as Prudential guarantee their quotes only for 14 days.
If finalising the deal takes longer than this, savers can be offered a new quote, particularly if rates have fallen.
Aviva has a ten-day guarantee which kicks in following a rate change. Canada Life and Standard Life give 14 days.
Canada Life says that after a quote is issued and application forms sent, signed and returned, it can take another 19 days on average to pay out.
A handful of firms offer longer protection.
Regardless of what happens to rates, Legal & General guarantees its quotes for 18 days, Aegon 21, Partnership 28, LV= 30, and Just Retirement 45."

GhIFA

The article is not entirely accurate - In many cases, the initial guarantee period is in respect of submitting the application, which the provider will then extend to enable the transfer of the money e.g. as long as the application is received in the initial 14 days, then a further 14 days applies for the transfer to be completed.

Quoting Canada Life as saying it takes around 19 days to pay out after receiving the application is a bit misleading as well - it may well take that time to reach the point where the money is in the client's bank account, but the date that will count for the purposes of any rate guarantee is the date the transfer payment hits the provider's bank account - which is going to be earlier and more likely to be within the guarantee period.

With the best will in the world, closed-book companies like Phoenix Life are not going to invest in the system needed to make the "faster payments" - most of the major companies now have this. The time it takes to complete annuity has come down significantly in the last few years, and in my experience, the vast majority of cases are now completed within any guarantee that applies.

The case study is useful though for demonstrating the value in using an IFA for annuity purchase rather than doing it yourself - not only would an IFA likely have got a higher rate, but they would have been chasing the process through as well, and the situation would have been very unlikely to have occurred.

dunstonh

Can only concur with above. The article contains incorrect information.

The guarantee periods get extended upon receipt of application. Indeed, some providers will accept an email from the IFA to extend it further rather than wait in the post.

If the provider uses the options system, you find the transfer of funds and process is about a week. Some just a couple of days. If the forms are not all provided at point of application then it can and will take longer. Same if the transferring scheme is an occupational pension that require a trustee to sign off on it.

Remember that if it does go outside of the guarantee period, the annuity rate could be higher.

Looking at the example in the article, Aviva use the options system but I dont believe Halifax do. Also, Halifax require the discharge forms to be completed. Halifax are a bit of a pain on admin and fussy. I have a case ongoing with them at the moment and they couldnt be more petty. However, Aviva on the other hand, tend to be first rate on annuity administration.

A lot of this could have been avoided had an IFA been used as there are inbuilt checks and the providers are geared for IFA servicing and not so much for direct to public. Also, pretty high chance that an IFA would have been cheaper than going direct as IFA would be fee based but the commission on DIY would almost certainly be higher than the fee resulting in a lower annuity rate as well as not getting IFA level terms.