Living Time Plan - "3rd Way" Products

fact_hunt

Hi all, a relative of mine is due to start his pension soon. He has various PPs worth about £200,000 (lucky him!). We've read something lately about alternatives to an annuity or income drawdown that might be under scrutiny from the Government.

It didn't make a lot of sense but such products appear to be able to provide a guaranteed income and guaranteed maturity value as well as being able to leave the fund value as a lump sum on death.

It sounds too good to be true, is it?

EdInvestor

These are a type of "variable annuity" popular in the US and so far offered by US insurers active here such as AIG, Metlife and Lincoln.

They are really a form of income drawdown with an add-on guarantee.

Be very careful about the charges which can be high.

dunstonh

It's one of those times where Ed and I agree on something so you know its got to be true

They are a half way house between annuity and drawdown and the charges reflect that. You are better off doing one or the other from a charges point of view. Of course, if you knew your date of death, it would make planning much easier and there would be some circumstances where this could be a better option. However, an annuity with buy back or drawdown in low risk investments would be more cost efficient.

fact_hunt

dunstonh wrote: »

It's one of those times where Ed and I agree on something so you know its got to be true

They are a half way house between annuity and drawdown and the charges reflect that. You are better off doing one or the other from a charges point of view. Of course, if you knew your date of death, it would make planning much easier and there would be some circumstances where this could be a better option. However, an annuity with buy back or drawdown in low risk investments would be more cost efficient.

Do you know where I could get an independent appraisal of these options (other than going to an IFA!). Thanks

EdInvestor

Why don't you outline the areas of concern here?

You may need an advisor in the end to deal with the technical stuff, but the more you know about how to arrange the portfolio , the less likely it is that you will get ripped off.

dunstonh

Do you know where I could get an independent appraisal of these options (other than going to an IFA!). Thanks

They are regulated products so only ones authorised to give advice on these are IFAs. (doubt any tied agents have access to any). The I in IFA is independent.

EdInvestor

If you only want him to evaluate say 3 products, then you could consider paying him a fee, which might reduce or eradicate any "commission bias" which might creep in if he was in a position to sell you one of them.

If you then want one, you could then try to purchase it via a discount broker such as https://www.cavendishonline.co.uk.But that would be on an execution only basis, no advice, and thus no consumer protection.

dunstonh

If you then want one, you could then try to purchase it via a discount broker such as www.cavendishonline.co.uk.But that would be on an execution only basis, no advice, and thus no consumer protection.

Only downside with Cavendish is that they dont seem to attract very good terms or enhancements on their life company products. I havent compared it with this sort of thing but on annuties, bonds and term assurance, they dont seem to get full enhancements. So, it may be worth still comparing a conventional IFA with Cavendish and their discount IFA service. It is also worth noting that Cavendish dont let you place business on execution only if its not on their panel of companies that have available for execution only.