MSE News: New pension freedom means it pays to know when you'll die

Pincher

kidmugsy wrote: »

Who's "they"? I've transferred several pensions: no set-up fee was involved with any of them.

One way or another, they will take your money.


Offer to bid spread? 101% going in, but some how it's 99% coming out.

Pincher

JimmyTheWig wrote: »

Future annuitants, arguably, but existing surviving annuitants won't have their pay-outs increased part way through their policy.

kidmugsy wrote: »

No: for annuities when you die early it's mainly the surviving annuitants who gain; that's the mutual insurance aspect. But, as I said above, you also have to cover all the costs of the company, and the cost of cautious overprovisioning. (If it proves to be overprovisioning: nobody can know in advance). So a tontine might cut costs (depending on its own costs), and be advantaged by being finite rather than an insurance fund that is, in principle, perpetual.

Pincher wrote: »

For people with no children to leave the pension pot to, the Tontine idea is worth considering, with some modifications.

A Tontine is set up and run for the benefit of its members, so the terms and conditions can be written however you like. Assuming the fund is partially invested, the returns can improve payout or reduce it. The attrition rate of the members can also affect the pay out.


You can set it up as flexibly or inflexibly as you want. For example, you can have 100 members, each paying £100k, and everyone gets a fixed £10,000 a year, until the money runs out.
Or you appoint trustees, who review pay out once a year, to actuarially work out a pay out ratio that will last, with a safety margin.

mancmum

I have a miserable small pension with Aegon. The independent financial advisor says that this pension is not set up to allow money to be drawn out. As I am a carer and my only income is from Carer's benefit, I want to draw up to the tax threshold each year. Especially as it is highly likely that I will pay tax again once the person I care for dies or needs specialist care that I cannot provide.

The question is. Will pension firms set up their pensions in the way the government wishes or will I end up losing money by having to transfer to another pension scheme...more commission for financial advisor etc, etc.

kidmugsy

JimmyTheWig wrote: »

Future annuitants, arguably, but existing surviving annuitants won't have their pay-outs increased part way through their policy.

No, I didn't make myself clear. The very fact that the long-lived get the total annuity income that they do is because the short-lived die off and cross-subsidise them.

kidmugsy

Pincher wrote: »

One way or another, they will take your money.
.

Who is this mysterious "they"?

kidmugsy

mancmum wrote: »

The question is. Will pension firms set up their pensions in the way the government wishes or will I end up losing money by having to transfer to another pension scheme...more commission for financial advisor etc, etc.

I'm sure they would be prepared to set up the pensions in a new way for all their old customers: would you lot be happy to pay for the costs of that though? Or do you want someone else to pay for it?

Why do you think you'll lose money transferring? I've transferred several times and it's not cost me a bean.

greenglide

or will I end up losing money by having to transfer to another pension scheme...more commission for financial advisor etc, etc.

IFAs don't have commission these days.

Transferring a pension yourself is easy and generally involves no cost.

An IFA would decide whether it was a good idea or not, that advice costs.

dunstonh

The question is. Will pension firms set up their pensions in the way the government wishes or will I end up losing money by having to transfer to another pension scheme...more commission for financial advisor etc, etc.

What commission?

Pension firms (that are still open for new business) already offer pensions that will offer the new options. However, it is unlikely you will see many legacy plans offer all the terms as the costs of doing that would be enormous.

System

kidmugsy wrote: »

No, I didn't make myself clear. The very fact that the long-lived get the total annuity income that they do is because the short-lived die off and cross-subsidise them.

But the cross-subsidy was built into the quoted return when they took out the annuity. The annuity provider took a risk on their estimate of the early-death rate being correct. But either way, nothing changes the amounts paid to existing annuitants.

But with the tontine, surviving members see their hopes of a bigger pay-out rising as their fellows die off.

Pincher

kidmugsy wrote: »

Who is this mysterious "they"?

Fine, if you insist on they do it for free out of the kindness of their heart, and "No set up fee" means you don't need to pay for their services, dream on.


http://www.hl.co.uk/pensions/income-drawdown/transferring-an-income-drawdown-pension?theSource=PCGFD&Override=1&sitelink=C&gclid=CPShldq6ssQCFQMewwodnkMAOg




<li class="spacer-top-half">NEW lower costs
No set up fee, no fees from us to transfer-in, no fee for drawing a regular income or one off withdrawals and no fee to switch from an existing income drawdown plan to the new unlimited version. Plus, exclusive super-low annual charges on top-performing funds and competitive annual management charges, together with online share dealing from £5.95 to £11.95 a deal. Find out more about drawdown charges and interest rates.