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Annuity - Spouse pension

Peartree
Posts: 796 Forumite

We lost my Dad a few weeks ago at the age of 79. He was self employed, paid a lot into his personal pensions and took financial advice via his firm of accountants on his annuities.
This morning, my Mum got a letter from Canada Life to say his annuity, which was single life, would cease – in fact she has to return the last payment.
My Dad was always very proud of the fact that she would be well provided for. He joked about the fact she would outlive him as her family are long lived and there were many merry widow jokes. As far as he was concerned she would be getting a good pension after his death. According to Mum he understood at the time that he would get a lower amount in his pension so that she would also be covered after his death.
As you can imagine, she is in shock. Mum was with him when they saw the adviser. Neither of them is/was stupid – Mum has always been very canny, but cautious, with their investments. But clearly annuities are very confusing for the layman.
I do not understand how it was not made crystal clear to a man sitting there with his wife next to him that he was taking out a product which would not provide for her after his death? There is no way on earth that he would do this. Surely this product wasn’t suitable for their needs?
Does anyone have any thoughts on this? Mum is going in to the accountant on Monday so any advice on how she should address this would be welcome.
This morning, my Mum got a letter from Canada Life to say his annuity, which was single life, would cease – in fact she has to return the last payment.
My Dad was always very proud of the fact that she would be well provided for. He joked about the fact she would outlive him as her family are long lived and there were many merry widow jokes. As far as he was concerned she would be getting a good pension after his death. According to Mum he understood at the time that he would get a lower amount in his pension so that she would also be covered after his death.
As you can imagine, she is in shock. Mum was with him when they saw the adviser. Neither of them is/was stupid – Mum has always been very canny, but cautious, with their investments. But clearly annuities are very confusing for the layman.
I do not understand how it was not made crystal clear to a man sitting there with his wife next to him that he was taking out a product which would not provide for her after his death? There is no way on earth that he would do this. Surely this product wasn’t suitable for their needs?
Does anyone have any thoughts on this? Mum is going in to the accountant on Monday so any advice on how she should address this would be welcome.
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Comments
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According to Mum he understood at the time that he would get a lower amount in his pension so that she would also be covered after his death.I do not understand how it was not made crystal clear to a man sitting there with his wife next to him that he was taking out a product which would not provide for her after his death?
What do you have in writing?0 -
She's going through the paperwork now. I will report back0
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We lost my Dad a few weeks ago at the age of 79. He was self employed, paid a lot into his personal pensions and took financial advice via his firm of accountants on his annuities.
This morning, my Mum got a letter from Canada Life to say his annuity, which was single life, would cease – in fact she has to return the last payment.
My Dad was always very proud of the fact that she would be well provided for. He joked about the fact she would outlive him as her family are long lived and there were many merry widow jokes. As far as he was concerned she would be getting a good pension after his death. According to Mum he understood at the time that he would get a lower amount in his pension so that she would also be covered after his death.
As you can imagine, she is in shock. Mum was with him when they saw the adviser. Neither of them is/was stupid – Mum has always been very canny, but cautious, with their investments. But clearly annuities are very confusing for the layman.
I do not understand how it was not made crystal clear to a man sitting there with his wife next to him that he was taking out a product which would not provide for her after his death? There is no way on earth that he would do this. Surely this product wasn’t suitable for their needs?
Does anyone have any thoughts on this? Mum is going in to the accountant on Monday so any advice on how she should address this would be welcome.
Commiserations for your loss. Unfortunately, there are many people in similar positions where they have taken out a single-life annuity which will not provide any further income to the spouse.
The question of whether there is any "blame" attached to the adviser is less clear-cut. Essentially, if your father's objectives were that he wanted to provide an income to your mother on his death, a single life annuity shouldn't have been recommended and there are grounds for a complaint. If on the other hand the matter was discussed and it was decided that the reduced income with a joint-life annuity wasn't worth the benefit it provided, I don't think there's much of a case at all. A lot of cases tend to fall into the murky grey area in between.
What is often forgotten (particularly in the media) is that the adviser is unlikely to benefit in any way from choosing a single-life annuity over a joint-life annuity. There's no incentive for the adviser to not recommend the appropriate annuity shape, other than laziness or negligence.
Like xylophone says, the first port of call is the paperwork on the case. The most important document is the suitability report (or reasons why letter), which should explain why the product was recommended and the "reasons why" it met your father's needs. Once you have a copy of this, you'll know a lot more about where you can go with this.
Another relevant document is the product illustration or quote. This should clearly state the type of annuity that was being applied for, including details of spousal benefits, guarantee periods, any escalation on payments etc.
An important point to consider is that if you do make a complaint it will be assessed objectively on the evidence available - ie the paperwork on file. The fact that a married man took out a single-life annuity is not in itself grounds for a complaint (at least not a successful one). There has to be something more than that.I work for a financial services intermediary specialising in the at-retirement market. I am not a financial adviser, and any comments represent my opinion only and should not be construed as advice or a recommendation0 -
I do not understand how it was not made crystal clear to a man sitting there with his wife next to him that he was taking out a product which would not provide for her after his death?
It is difficult to see how it couldn't be when you know the process. Although if it was non-advised, the requirements are less. The fact accountants were used instead of advisers may impact on that.
The typical process is that a discussion takes place that ascertains the financial situation, then a discussion of the key options. Until Dec 2012, spouse inclusion on annuity was quite expensive. So, often people would go single life but with a 10 year term. Financial need may also come into it. If there is enough other income and/or savings, then many people will go single life to get the higher annuity rate and take the chance.
As for paperwork, there would have been an illustration of benefits issued prior to sale. Another issued confirming the figure and terms post sale. These would match the discussion.
So, it is very common indeed for a married couple to have a single life annuity. Low income households are often better having single life as pension credit (on first death) would be reduced if a 50% spouse pension existed. High income/savings households dont need the spouse income and are better with the higher annuity rate.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
http://www.telegraph.co.uk/finance/personalfinance/pensions/9690974/Cowies-Quick-Guides-part-1-Annuities.htmlAn important point to consider is that if you do make a complaint it will be assessed objectively on the evidence available - ie the paperwork on file. The fact that a married man took out a single-life annuity is not in itself grounds for a complaint (at least not a successful one). There has to be something more than that.
Indeed the case.
http://www.thisismoney.co.uk/money/pensions/article-1690893/The-widows-abandoned-without-a-pension.html
http://blogs.telegraph.co.uk/finance/ianmcowie/100024578/why-wont-regulators-act-to-end-the-multi-billion-pound-scandal-of-widows-without-pensions/0 -
What age did he retire? The thing is if he retired at say 65, and chose the single life option, where obviously the income would be higher, he has had the higher income for the last 14 years.
I cant see there is much you can do unless its a mistake and the paperwork says different.0
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