Decent annuity rate?

bmm78

dunroving wrote: »

Might be a daft question, but I have been quoted the following rates for a single-life, lifetime annuity with a 15-year guarantee:

At age 60: 6.15%
At age 65: 6.81%

- this is pretty good, yes???

Looking purely at the numbers, I think it would be difficult to beat those figures on a like-for-like basis with a UK annuity.

A 6.81% rate at 65 would currently require significant uplift due to medical/lifestyle factors.

15 year guarantee periods are not yet available on UK annuities, but I imagine that they would be priced conservatively and reduce the starting income considerably.

I'm not an expert on US annuities, but my understanding is that they tend to be priced better as the solvency requirements for the firms offering them are less.


Something to consider is that many regulated UK firms are very reluctant to give advice relating to US pensions. Aside from the question of whether they have the necessary expertise, claims arising in the US are a common exclusion in indemnity cover policies. Every firm I have been connected to would avoid getting involved in such cases.

dunroving

bmm78 wrote: »

Looking purely at the numbers, I think it would be difficult to beat those figures on a like-for-like basis with a UK annuity.

A 6.81% rate at 65 would currently require significant uplift due to medical/lifestyle factors.

15 year guarantee periods are not yet available on UK annuities, but I imagine that they would be priced conservatively and reduce the starting income considerably.

I'm not an expert on US annuities, but my understanding is that they tend to be priced better as the solvency requirements for the firms offering them are less.


Something to consider is that many regulated UK firms are very reluctant to give advice relating to US pensions. Aside from the question of whether they have the necessary expertise, claims arising in the US are a common exclusion in indemnity cover policies. Every firm I have been connected to would avoid getting involved in such cases.

Thank you! This is the sort of friendly helpful feedback I was hoping for when I first posted.


I don't expect any UK firms to give me advice on the US side of things, I actually have a lot of information on that already. I'd be using a SIPP to fund a UK annuity (if I took one - not likely as it seems) and simply use the US money to finance it (i.e., to live off rather than income from the SIPP that I'd use to fund the annuity, if that makes sense!) So I'm not thinking of asking a UK firm to take my US pension fund and use it to buy a UK annuity.


The bit in bold is exactly the sort of thing I was thinking, so quotes of 7% for UK annuities is probably based on chronic smokers living in East Glasgow with Type I diabetes.

sandsy

I think it's unfortunate that, for the most part, advisers simply don't post their charging structures on their websites given that they're all required to have one and provide it before the advice process starts.


This is the sort of transparency that the general public would like to see and would help enhance trust in advisers.

bmm78

dunroving wrote: »

The bit in bold is exactly the sort of thing I was thinking, so quotes of 7% for UK annuities is probably based on chronic smokers living in East Glasgow with Type I diabetes.

Not sure of the exact profile for a 7% rate, but bearing in mind that standard rates are around 5.5% for a 65 year old there would need to be some notable factors pointing towards a reduced life expectancy.

Thing with annuities is that they are a movable feast, and rates have took a hit across the board recently. It wasn't too long ago that 65 year olds were getting 6.5% with pretty mild enhancements (bit of blood pressure or cholesterol). Rates may rebound in a few months, or they could get even worse. That's the (ahem) "beauty" of annuities

dunstonh

sandsy wrote: »

I think it's unfortunate that, for the most part, advisers simply don't post their charging structures on their websites given that they're all required to have one and provide it before the advice process starts.


This is the sort of transparency that the general public would like to see and would help enhance trust in advisers.

The concept is a good idea. However, the problem is that often before you start a case, you dont know the work involved. If you say it will cost £x for retirement options, that doesnt cover the workload, qualifications and liability differences of the different options. So, do you then say it will cost £x for annuities and £y for drawdown. But then do you keep it the same price if there is just one personal pension compared to say someone with 3 PPPs, a section 32 buy out bond with GMP and a S226 RAC with GARs?

The first appointment being free is there to allow discussions to take place to find out what is likely to be reviewed and then get an indication of costs.

Some areas could be priced easier than others but every charging method would have pros and cons. Going single price for a transaction would mean you needing to set a charge that would make you more expensive for simple things but cheaper for more complicated. i dont know if there is an solution that can be that easy and keep everyone happy.

atush

Gtekser wrote: »

From what has been portrayed in the way of being help by Dunstonh who seems to be in or know the Pensions industry UK wise. I am aghast at the conceited and self opinionated troll nature of the replies which continue to try and intimidate someone who asks a seeking advise question in a perplexing area.

that was nothing short of a personal attack on someone who is informative and helpful.

atush

dunroving wrote: »

I have a US site and understand the US side of things, thanks. My question was posted on here because it pertains to a UK question - is there a UK annuity product that can beat these terms? Why does that require a US site?


I didn't change things. I added information only, which is the way these forums work, surely? What part of my story did I change?

Adding things later then criticizing advice based on the lack of same is disingenuous at best, downright cheating at worst.

and you can't put US income into a UK pension. And annuities bought from UK pensions funds aren't always the same as annuities bought with money outside a pension.

jamesd

It's entirely permitted to use US income or capital to fund UK pension contributions. The option to take the money over ten years could be used for this. The relevant limits are the earned income or the £40k a year. Provided the total UK pension contribution is within those limits it's fine.

For a UK comparison you'd really need to get some enhanced annuity quotes that won't involve an adviser doing much work, since you won't be making a purchase at this point. You might try asking Hargreaves Lansdown since they do offer such a service and could handle the extra work with no sale to follow. From the look of the examples here I doubt that the enhancement would be enough to beat what you're being offered.

dunroving

atush wrote: »

Adding things later then criticizing advice based on the lack of same is disingenuous at best, downright cheating at worst.

and you can't put US income into a UK pension. And annuities bought from UK pensions funds aren't always the same as annuities bought with money outside a pension.

What utter tosh. I didn't disingenuously "add things later" - if you read the posts chronologically, there were plenty of replies that managed to actually read the content and subsequently respond to it. Any minor edits to posts were due to bad typing on my part (common) or to add an extra minor piece of information.

I may have only recently joined this particular forum but have been using online forums for over 15 years and am a senior member on another forum. I know what you are referring to and I didn't do that - I've got a bit more integrity than that.

When I said I added information I didn't mean I went back and added new information to an existing post to intentionally "cheat" (are you for real???) I meant I added information via new posts as the story developed. That's how forum threads normally work (that's why it's called a "thread")

Dunstonh simply was so intent on picking out bits to argue with and assuming I was a clueless numpty that he wasn't reading carefully enough to notice importaan details. And despite repeated requests to just give me an answer to my original question, he just kept writing patronising, condescending replies.

Where did I say I was going to buy a UK annuity with US income? The plan was to use a SIPP to fund the UK annuity, and use the US funds to fund my living costs (thereby freeing up the SIPP). I explained that clearly in a recent post (see Post 43, before your post). You seem to be doing exactly the same as Dunstonh - not reading the thread, just picking bits out and misinterpreting them. And you talk about being disingenuous?

This forum is fantastic and many of the threads are very much in the spirit of MSE. But some of the responses on this threads just stink. We have a couple of "Bash the newbie" types on the other forum and the mods usually ask them to rein it in.

jem16

dunroving wrote: »

When I said I added information I didn't mean I went back and added new information to an existing post to intentionally "cheat" (are you for real???) I meant I added information via new posts as the story developed. That's how forum threads normally work (that's why it's called a "thread")

You're correct in saying that further information can often be added as a thread progresses. However, for me, the most important piece of information did not appear till Post 17 and that was the fact that what you had asked people to comment on was a U.S. product not available in the UK. Had you posted that information in the first place I suspect you would have got far more useful replies.

This forum is fantastic and many of the threads are very much in the spirit of MSE. But some of the responses on this threads just stink. We have a couple of "Bash the newbie" types on the other forum and the mods usually ask them to rein it in.

Unfortunately the same should really be said of the "Bash the IFA" responses that were seen on this thread.