Annuity or drawdown

jamesd

The passing outside your estate is mostly relevant only if it is going to be subject to inheritance tax.

There is a benefit that it might happen faster, since it doesn't have to wait for probate or any other delays in sorting out the estate.

Since there's no practical value in buying an annuity from Abby Life they are moot. But you should do it for wherever the drawdown pot is being held while deferring your state pension. No practical value because you can get something like twice the income for the money while alive and the same after first death than an annuity they would sell.

ramb

No, I don't have guaranteed annuity rate from Abbey Life. It is just that they are now owned by Phoenix Group. And I think Phoenix group is not all that fair to the policy holders, when it comes to charges etc.
I know from the experience of their takeover of Pearl Group , originally AMP.. I have a life insurance policy with them (originally AMP) where they have stopped adding any annual bonuses for last several years - in fact since they took over no annual bonuses have been added and they say it won't happen for the foreseeable future.

dunstonh

And I think Phoenix group is not all that fair to the policy holders, when it comes to charges etc.

Phoenix have not increased any of the charges and have honoured the terms of the contracts they have inherited through their purchases. So, why do you think they are unfair?

I know from the experience of their takeover of Pearl Group , originally AMP.. I have a life insurance policy with them (originally AMP) where they have stopped adding any annual bonuses for last several years - in fact since they took over no annual bonuses have been added and they say it won't happen for the foreseeable future.

Pearl was on zero annual bonus before they sold to Phoenix on their V1 plans and many of their S226 retirement annuity contracts (most of which had GARs and some had guaranteed minimum maturity values). The V2s, V3s and V4s had an annual bonus that was the same as the annual management charge. The returns were switched to the final bonus and to be honest, for a closed WP fund from a dead insurer, the total returns have been pretty good. Most WP funds have switched the bulk of returns to the final bonus as the FCA solvency requirements have left them little choice.

kidmugsy

ramb wrote: »

No, I don't have guaranteed annuity rate from Abbey Life. It is just that they are now owned by Phoenix Group.

Good Lord, that's no reason to buy an annuity. If you don't like the provider just transfer to another one. We like Hargreaves Lansdowne, though with about £70k you could find a provider that is usefully cheaper.

http://monevator.com/compare-uk-cheapest-online-brokers/

westv

dunstonh wrote: »

You dont rely on that. It is a basic guide using default pricing and full commission. It doesnt take into account economies of scale pricing that IFAs get or that IFAs are usually cheaper than DIY commission deals when the fund is above £25k.


t.

Just wondering what sort of general uplift in percentage terms an IFA might be able to achieve on an annuity -or is the answer to variable to say.

dunstonh

westv wrote: »

Just wondering what sort of general uplift in percentage terms an IFA might be able to achieve on an annuity -or is the answer to variable to say.

It is too variable to answer. I have had several people use online services to get a quote and in each and every case we were able to get better prices. In some of those cases our fee was higher than the commission and still gave more income.

I partly put some of that down to us completing and obtaining medical details more thoroughly. The quote system works on the basis that you cant get less by giving more detail. You can only get more. You often have to coach sensitive medical information out of people are get copies of records to supply the providers for them to enhance the quotes further.

Another reason is that the reps of the providers will usually call within a day or two of getting a quote and you can haggle the price upwards with some of them. They will also talk through medical conditions where they think a bit more info could boost the figure. That sort of communication and haggling you do not get with online sites.

A number of DIY areas can result in lower charges than advised. However, annuities are one of those areas where advised beats DIY.

ramb

Thanks everyone replying to my query; especially Jamesd and Linton.
Suggestion of differing state pension for say 4.5 years and drawdown about £11.5k each year for that period, using my annual tax allowance, makes tremendous sense. And get about 46% increase in my current state pension of £8.1k ,with index linked increase, makes huge sense.
And the other benefits as pointed out also would be very useful.

Thanks for this board. It has also guided me in the past regarding my capital gains tax query.