Annuity Rate payback time.

meanscot

I was wondering if there is a calculator to work out how many years you annuity must run before you have had your money back from the annuity provider.


Having had my small annuity running for 6 years, I would be more than happy to get the rest of the cash back and pay Osbourne (and his pal 'Call Me Dave') the tax on the money returned. However I don't suppose this will ever happen.


Could there be mis-selling claims arising from people being force to buy annuities in the past against Brokers, Insurance Companies, etc. similar to the the PPI farce ? Now that would ne nice.


meanscot

greenglide

meanscot wrote: »

I was wondering if there is a calculator to work out how many years you annuity must run before you have had your money back from the annuity provider.

You have bought the product, you cannot change your mind. What makes you think that any other alternative (and the alternatives havent really changed despite the smoke and mirrors in the budget) are now better?

Could there be mis-selling claims arising from people being force to buy annuities in the past against Brokers, Insurance Companies, etc. similar to the the PPI farce ? Now that would ne nice.

Why? Most annuities are bought by people who appear to have ignored the statement from their pension provider that they could be better off using the whole market option.

Just because people havent read the label and annuity rates have fallen dramatically doesnt mean that anything has been miss-old.

dunstonh

I was wondering if there is a calculator to work out how many years you annuity must run before you have had your money back from the annuity provider.

I would think any calculator could work out such a simple thing.

Pension value minus lump sum is the amount of pension. divide that by the annual annuity to give you the number of years.

It gets harder if its an indexed linked annuity and that only tells you what you get back against the fund value. Not what you actually personally paid into it. However, you could work that out easily by looking at your past contributions.

Could there be mis-selling claims arising from people being force to buy annuities in the past against Brokers, Insurance Companies, etc. similar to the the PPI farce ? Now that would ne nice.

How would that be nice? A complaint would be frivolous and stupid and would effectively say "I wish to complain as my adviser did not have a crystal ball and was unable to foresee changes".

Thankfully, quality of advice is always measured on the rules that are in place at the point of sale or known changes that are to occur. You will not get compensation and I am very happy you wont.

meanscot

Well I'm not surprised that IFA's like dunstonh would not be happy if annuity holders were able to make a claim regarding. mis-selling of annuities.


Using his calculation it will take me more than 15.5 years to get my money back from my small annuity. This does not take account of the fact that the annuity provider is getting interest on my remaining capital, 24/7.


Are statistics available of the percentage of annuity purchasers who actually beat the system and get all their money back ? That is before they pass on to that great Financial Heaven in the sky, where your average person in the street is no longer ripped off by overpaid, over bonused Bankers and others of that ilk.


meanscot

bmm78

meanscot wrote: »

Could there be mis-selling claims arising from people being force to buy annuities in the past against Brokers, Insurance Companies, etc. similar to the the PPI farce ? Now that would ne nice.

There would need to be evidence of mis-selling based on the regulations at the time.

Bearing in mind the rules on compulsory annuitisation in the past, the scope would mainly be limited to not being made aware of the availability of the open market option and enhanced rates.

Complaints purely about rates being low or not getting the fund back are unlikely to go anywhere.

The rules on annuities haven't changed, and in theory there is no more potential for a mis-selling claim today then there was prior to the budget (although many will probably try).

dunstonh

Well I'm not surprised that IFA's like dunstonh would not be happy if annuity holders were able to make a claim regarding. mis-selling of annuities.

Its not just that, I do not like anyone making fraudulent or try-it-on claims in any area. So many things that benefit the majority are lost because of try-it-on/fraudulent claims.

Using his calculation it will take me more than 15.5 years to get my money back from my small annuity. This does not take account of the fact that the annuity provider is getting interest on my remaining capital, 24/7.

The annuity provider invests in gilt and cash like investments. The returns from those are factored into the annuity rate along with some capital erosion and mortality gain.

The breakeven point tends to be around 10-12 years. If you buy a poor value annuity than it will be less. Or maybe more options were built into yours.

hat is before they pass on to that great Financial Heaven in the sky, where your average person in the street is no longer ripped off by overpaid, over bonused Bankers and others of that ilk

What have bankers got to do with annuities?

I hope you take more care and analysis when voting on independence than you are with annuities.

Linton

meanscot wrote: »

.....
Using his calculation it will take me more than 15.5 years to get my money back from my small annuity. This does not take account of the fact that the annuity provider is getting interest on my remaining capital, 24/7.
...

Average life expectancy for someone reaching retirement age now is something like 20 years and expected to continue increasing, 15.5 years to break even isnt that surprising.

From the Government Actuary's figures the % of men now aged 65 who are expected to die after they are 80 (ie > 15 years) is roughly 70%. For women its 80%.

So annuities arent that much of a gold mine for the pension companies. The money they gain from people dying early mainly goes to pay those who die late.

meanscot

meanscot wrote: »

Are statistics available of the percentage of annuity purchasers who actually beat the system and get all their money back ?
meanscot

Perhaps dunstonh you have the answer to this question.

dunstonh wrote: »

I hope you take more care and analysis when voting on independence than you are with annuities.

Indeed I shall take more care and analysis on the issue of Scottish Independence but I'm not sure what this has to do with annuities, apart from showing your personal Scotophobia and arrogance, typical of those working in the Financial Sector south of Hadrian's Wall and the white settlers north of it. :rotfl:


meanscot

rpc

meanscot wrote: »

This does not take account of the fact that the annuity provider is getting interest on my remaining capital, 24/7.

Interest? What do you think they do with the money?

They will be receiving gilt coupons, yields of which are currently really rather low. Most of that gets paid out to the annuity holders.

Are statistics available of the percentage of annuity purchasers who actually beat the system and get all their money back ?

Linton's numbers seem to suggest upwards of 75%.

Don't forget that, although there is some profit, providing a guaranteed income is expensive. When you buy an annuity, you are getting a certain income regardless of whether interests rates and markets go up, down or start doing pirouettes.

At the moment, drawdown is there as an alternative for those who don't mind volatility. Annuities aren't compulsory.

I suspect the majority of profit on annuities comes from those who don't bother reading the great big warning that they might do better using the open market option. So the "got your money back" figures are probably rather different for those that shopped around and those that couldn't be bothered taking some time to make one of the most important financial decisions in their life.

meanscot

I did take advice from an IFA and shopped around but with such a small pension pot this was the best offer I had.


meanscot

kidmugsy

"meanscot" is obviously No True Scotsman, but some sort of "black flag" operation set up by one of the usual villains - the Labour Party, say.