How to find a good annuity

dunstonh

I am fairly confident that an ifa could not have significantly beaten this. If there was a fee in addition to the commission paid by the annuity provider then I am sure I would be worse off if I had gone down that route.

That is not correct. It is not a fee and commission. An IFA is fee only and annuity rates are commission free. When you DIY, the annuity rate is reduced to reflect the commission. If the fee and commission were the same, then there would not be a lot of difference in the initial rates. IFA would probably be a tad higher. However, with enhanced rates, these providers haggle with IFAs and you often get 5-10% improvements over the electronic rates.

Yes, but the net effect to the customer is still an additional cost which on a small pot might well outweigh any benefit the ifa could generate.

It would have to be pretty small. Figures under £20k typically.

bigadaj

jem16 wrote: »

Wasn't suggesting otherwise. I was just clarifying that it's not commission PLUS fee.

Fair enough, and just to clarify from a customers perspective it's eminently possible that on a small pot then the fee can be greater than the commission, which I think is what the poster meant, though didn't express very well.

It would be interesting for them to come back and post some figures to allow a comparison to be made to see whether an ifa could better the deal in net terms.

SallyG

Thanks for these posts Debutante - lots of interest in the mechanics of annuitising - wish the name annuity could be replaced by something a bit more descriptive/accurate - annuity comes from annual ? - I'm interested in the concept that annuities are commission-free but if you ask for a quotation and aren't an IFA or broker, commission will be deducted anyway - did any of the providers who gave you an annuity quote/offer mention the fact that they were deducting/charging you commission?

Debutante

I would rather not go into details as there were health issues, hence the enhanced annuity. Most of them (if not all) disclosed the fact there was commission. I have not read all the small print y working in some stated quite ite obviously the amount they were deducting as they were intermediates. I hope I made it clear that I was comfortable with diy as this was a small sum. The main family pension has not been taken yet and I will be taking advice for that.

I had completely forgotten about this pension pot until a letter arrived a fortnight ago and I happened to have some time on my hands hence my decision to have a bit of fun by diy'ing. I have been working in China for a few years and my personal financial life here had become chaotic to say the least

jem16

Debutante wrote: »

I would rather not go into details as there were health issues, hence the enhanced annuity.

Wasn't really looking for details as these will vary from person to person anyway.

It was more the annuity rate that you managed to achieve which I thought would be helpful to others reading the thread.

dunstonh

I'm interested in the concept that annuities are commission-free but if you ask for a quotation and aren't an IFA or broker, commission will be deducted anyway

IFAs (and other advisers) cannot receive commission. DIY are still paid commission.

did any of the providers who gave you an annuity quote/offer mention the fact that they were deducting/charging you commission?

All of the DIY ones should disclose it. There are concerns that some DIY providers are hiding it and the regulator has recently announced a review of DIY services.

Here is a case that I received this week. A £29,613 fund (after tax free cash). Provider offered £1903 (after some basic questions on health). The person qualified for enhanced rates and had looked at DIY options and was given £2037 as best price he could find. The commission was £1036. I did it on fee basis of £1000 with fee deducted from pension pot after payment of tax free cash. So, broadly similar to the commission payable and got a an income of £2450.52. I put it down to the haggle process which saw a couple of increases over the week and further clarification of medical points which I could see were not getting included due to incomplete information on the medical form the person had filled out. The online methods dont tell you that something is not being included. They quote only on what they are told. They dont haggle either.

Debutante

Final update: thanks to the tip off from Dunstonh, I contacted the chosen annuity provider and haggled - got another £45 pa ! - better than nothing thanks to all the people who contributed to this thread. I have learnt it is possible to diy - it is quite a lot of time and hassle but I am confident i have got close to the best deal available.

atush

Would still be helpful to others, and won't hurt your personal info, if you just say the rate (as a %) you got overall.

So there a few things to learn here, but not just what you seem to have learned.

For a start, an IFA which cost you nothing but time here (Ie D) got you an extra 45 a year, that is a pint and a packet of crisps to toast him with each month lol.

Second, you might have done better if you had found a good IFA as the illustration in post 37 suggests. At least you did better than before though.

zagfles

Debutante wrote: »

Final update: thanks to the tip off from Dunstonh, I contacted the chosen annuity provider and haggled - got another £45 pa ! - better than nothing thanks to all the people who contributed to this thread. I have learnt it is possible to diy - it is quite a lot of time and hassle but I am confident i have got close to the best deal available.

Thanks for the update - it's good to know that it's not just IFAs who can haggle!

SomeUser

A bit late now but you could have entered into a capped drawdown arrangement if you wanted to be able to take it annually capped lump sums.