Tendering your pension?

zagfles

derickadams38 wrote: »

Hello, Some time ago I used an adviser to set up my annuity. He told me that advisers can get a better rate or yearly income than if I were to shop around myself. Is this true ?

Do both! There are execution only brokers who will refund part/most of the "commission", you could get a quotes from these and see if an IFA can beat it net of advice fees.

A few previous threads on annuities:

http://forums.moneysavingexpert.com/....php?t=4896690
http://forums.moneysavingexpert.com/....php?t=4846538
http://forums.moneysavingexpert.com/....php?t=4266723

jamesd

derickadams38 wrote: »

Hello, Some time ago I used an adviser to set up my annuity. He told me that advisers can get a better rate or yearly income than if I were to shop around myself. Is this true ?

It's true but there's an even bigger issue you need to watch out for: deferring your state pension is likely to get you about twice the inflation-linked income of a comparable annuity. So you need to compare what you can get from deferring your state pension to any annuity quotes to work out whether even the best of the annuity quotes is worth accepting.

There are some significant assumptions included in that general rule:

1. health. It assumes that health is roughly normal good health. If there are things from obesity to diabetes or smoking let alone substantial heart disease it's possible that an "enhanced annuity" might pay more than state pension deferral.
2. age. It assumes that you're around state pension age. If you're substantially above that age an annuity could easily offer the best deal, with that starting to become most likely even in good health around the 80-85 years old sort of range.
3. how much money there is to spend. Deferring for five years is likely to be a good deal for both men and women in both break even and long life insurance situations and that often means spending up to perhaps £40,000 for a lowish state pension. If you have way more than this you may not be ale to sensibly defer for long enough to spend the whole amount of money.

So it's definitely worth shopping around but do ensure that you compare to the state pension as well as annuities.

You may also want to consider drawdown option since there are readily available tools that take much of the pain out of coming up with sensible drawdown income levels. Combining those with buying the largest sensible amount of state pension deferral can be an excellent combination.