Annuity with no increases, can we do anything to change that

happyhero

Hi, my mother has asked me to put a question on here for her. She is 80 and has too much savings to get Pension Credit but she is only getting a small state pension and a small Aviva Pension that does not ever increase.

I asked her for all her paperwork regarding the Aviva (Norwich Union) annuity.

She finds it frustrating that it doesn't increase each year when her husbands private ones do.

This closer look at her pension was prompted by the fact that my father has gone into a care home permanently recently and she is now struggling to pay the fees and bills. Obviously she wants as much income as she can get at this awkward time.

This annuity was started in 1999 it appears and my father after seeking advice got her to select the option that never increases. She got extra immediate pension back then for doing this and a lump sum.

So now to the questions,

I know lots has happened over recent years with pensions so is it now possible for her to change this pension into one that does increase and what effect would this have on the monthly amount if it is possible?

Is it possible to move a paying annuity to someone else and if so who would be best to move it to?

Or is there nothing she can do?

Any help or info appreciated.

wjr4

It is not possible to change the annuity unfortunately.

Pension_Geek

Once it is purchased, the terms are set in stone. She would have got far less income to begin with had it been index linked. Unfortunately, the recent changes in legislation will not help her.

MEM62

You cannot unwind an annuity. It is fixed for life. What will be of benefit is to look at the funding of the care home costs. Is your father entitled to any assistance there?

dunstonh

She finds it frustrating that it doesn't increase each year when her husbands private ones do.

The decision to buy level of indexed is made at the time of purchase of the annuity.

However, you can tell her that level ones start higher. Think of it as a see saw. Level vs one side pushed down. The lower side being the starting point and the higher side where it ends up. But in reality, the amounts payable over time will be broadly the same. (usually around 20-25 years is the breakeven point.

I know lots has happened over recent years with pensions so is it now possible for her to change this pension into one that does increase and what effect would this have on the monthly amount if it is possible?

no

Or is there nothing she can do?

no there isnt.

Malthusian

At current rates, opting for index-linking halves the starting amount of the annuity (source). Don't know if that was the case in 1999 but it seems a reasonable assumption.

That means if your mother had an RPI-linked annuity, it would still likely be paying her less than it actually is, even after 20 years' worth of inflation increases. (RPI is only up 73% and you need a 100% increase to make up for halving the starting income.) And she would have forfeited a lot of money because the gap would have been even bigger in the early years.

Absolutely nothing to be frustrated about unless she finds being richer frustrating.

xylophone

Hi, my mother has asked me to put a question on here for her. She is 80 and has too much savings to get Pension Credit

She is sure of this?

https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs48_pension_credit_fcs.pdf

my father has gone into a care home permanently recently and she is now struggling to pay the fees

She has checked out paying for care when part of a couple?

https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs39_paying_for_care_in_a_care_home_if_you_have_a_partner_fcs.pdf