Pension introduction fee?

LAWood

Hi My husband has been paying into a pension fund with Aegon. He recently contacted them for a forecast and was told they don’t do annuities, but Legal and General do on their behalf. He was told to contact them, but he could contact other companies if he wished.
He contacted Legal and General independently of Aegon and they have given him some quotes, but have said that they will have to pay an introduction fee of £3384.10 to Aegon from his pension fund.


This seems quite a sum for a one sentence verbal referral. He hasn't yet contacted any other companies as L&G seemed to be the best option.


Does anyone have any experience of this or any advice?


Thank you

MallyGirl

Do you definitely want an annuity would be my first question?

Linton

If your husband really wants an annuity it may be better financially to go through a local IFA (Independent Financial Advisor and the I is very important) who can search the whole market for the best deal specifically for your husbands circumstances and wishes. IFAs can haggle with the providers and also could have access to providers who do not deal with the general public. This is almost essential if your husband has the chance of getting a better rate because of ill health.


Taking an annuity is not the most popular option these days, again an IFA would be able to advise him on the alternatives.

SonOf

He recently contacted them for a forecast and was told they don’t do annuities, but Legal and General do on their behalf. He was told to contact them, but he could contact other companies if he wished.

They do not issue forecasts either. They issue projections. Quite a different meaning.

Most insurers have ceased to offer in-house annuities now and pass onto a third party or in-house open market option team (which are usually quite poor quality compared to an IFA).

He contacted Legal and General independently of Aegon and they have given him some quotes, but have said that they will have to pay an introduction fee of £3384.10 to Aegon from his pension fund.

As it is non-advised, they can still pay commission. A commission of that amount suggests the fund value is high enough for an IFA to be involved. IFAs get the best annuity rates and you will probably find the fee is less than the commission. That in turn gives a better annuity rate as well.

This seems quite a sum for a one sentence verbal referral.

Its not a referral. It is a commercial arrangement. The annuity provider has agreed to pay the pension provider for doing the annuities rather than the pension provider do them.

He hasn't yet contacted any other companies as L&G seemed to be the best option.

Really? I haven't seen L&G come out top or near top on annuities for many years.

Does anyone have any experience of this or any advice?

Go see a local IFA.

MEM62

LAWood wrote: »

Hi My husband has been paying into a pension fund with Aegon. He recently contacted them for a forecast and was told they don’t do annuities, but Legal and General do on their behalf.
But they do projections and he could ask for one. And why does he want an annuity?

He was told to contact them, but he could contact other companies if he wished.
He can ask anyone for an annuity quote. It is a free market but we really need to establish why you feel that an annuity is what you need.

He contacted Legal and General independently of Aegon and they have given him some quotes, but have said that they will have to pay an introduction fee of £3384.10 to Aegon from his pension fund.
On what basis?

This seems quite a sum for a one sentence verbal referral. He hasn't yet contacted any other companies as L&G seemed to be the best option.
If he hasn't spoken with anyone else, on what basis are you convinced that L&G are the best option when you do not know what the other options are. Seems you have made a decision without any comparative info.

Does anyone have any experience of this or any advice?

Advice, yes. See an IFA and take proper advice. I think you will see a considerable benefit from it.

Thank you

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Brynsam

LAWood wrote: »

He hasn't yet contacted any other companies as L&G seemed to be the best option.

Why are L&G the best option when you have nothing with which to compare them? If you google on 'compare annuity rates' you get plenty of (free) options to use - try https://www.moneyadviceservice.org.uk/en/tools/annuities