Transferring an annuity with a GAR

PeterBalham

As a PS GDB

LV told me they are not providing the Annuity themselves they have a panel of companies they approach on behalf of Reassure and select the cheapest quote they can from this panel.

They asked me lifestyle questions when I first asked for an anuity quote which initially confused me but in the contest if what is happening I understand it now.

I do not have to take the annuity for 16 years

If it was not for the fact I tend to tell the truth I am tempted to ask for one in a years time when I say , I smoke 50 cigarettes a day, consuem 70 units of alcohol a week and have taken up sky diving and volumtary work in Iraq

GDB2222

dunstonh wrote: »

Not specific in details but many providers have signed with annuity providers to be their in-house option. Its fairly widespread and understood.

The receiving provider (LV) would have agreed terms with Reassure to provide specific terms that allows Reassure to price its liability on the plans with GARs. Those terms would be better than market rates. If Reassure were just picking LV using off-the-shelf rates, then the figure would probably not be £25k but £30-35k. LV have priced their rates on the assumption of getting x% of the total GAR book from Reassure. The contract would not allow Reassure just to give it away in cash. If that happened, it would cost Reassure more. Not save them money as the annuity rate LV offer would be lower and Reassure would have to increase the sums being paid. So, this proposal to save them money is anything but.

Reassure don't want the costs and insurance liability of the annuity as its not their market. LV do as its part of their business. Reassure already bought most of its book on the cheap. So, can afford to sell its liability at what would appear a loss but its not.

Bottom line is that if the OP wants the lump sum then it is already cheap at £12k. Why would they want to pay £20k instead of £12k?

Fair enough. I'm surprised that anybody has told the OP what it is costing Reasure to reinsure his annuity. If it's a done deal, it's not really his business.

Malthusian

PeterBalham wrote: »

If it was not for the fact I tend to tell the truth I am tempted to ask for one in a years time when I say , I smoke 50 cigarettes a day, consuem 70 units of alcohol a week and have taken up sky diving and volumtary work in Iraq

The insurer would be the winner in that case. We'll start by assuming you're actually proposing to take up chain smoking and binge drinking rather than commit insurance fraud. The rate they will quote for a chronic addict would reflect the life expectancy of the average chronic addict - but where you differ from the average addict is that the addict will have spent their whole life smoking and drinking and the fact that they're still alive to claim their pension indicates that they have built up a pretty high level of tolerance. You on the other hand being a relatively clean-living person up till now don't have that tolerance. All that smoking and drinking will most likely kill you pretty quickly - and the insurer will get most of your pension fund.

Said it before and will say it again - the way to beat the insurers is a purposeful life with plenty of physical and mental exercise.

PeterBalham

Thanks for the advice about the exercise and eating well I am a bit OCD about both

Another odd thing now is that LV say that if they "set up" my pension my LTA will be reduced by 2.5% = 25k/ £1million

Whereas if reassure do so only 1.2% of my LTA will be used up = £12k /£1milion

That is not what reassure told me but their contact was very polite but now really knowledgable

The LV woman who gave me the annuity numbers wrote an email to me saying it would definantly be 1.2%

In some way 2.5% makes more "sense" to me but I will see what reassure now say

sandsy

You are crystallising a fund of £12k. The fact that Reassure have to pay LV more than that to secure the benefit they promised you should not impact on your LTA.

PeterBalham

Thanks Sandsy I can see how that makes sense I may well use exactly that turn or words if Reassure do not see it that way , Thanks agian,

dunstonh

I concur.

The pension value is not being increased. The money being paid to LV is being increased from a payment by Reassure. If it was going into your pension, then you could do what you wanted to do in the first post. (i.e. buy the annuity then cancel it within the cancellation rights period. The money wouldnt go back to the original plan but would need to be transferred elsewhere)