Open market Annuity charges

EdInvestor

benny5 wrote: »

The clarification I was seeking centered around my current fund valuation of £XXXXXX and the annuity offered. Based on this current fund value, 'open market' provider's figures appear higher.

Who is the pension provider? Some of them are actually not looking for annuity business, and thus their quotes are low compared with the competition to encourage you to shop around.

benny5

dunstonh wrote: »

Is the value a projected value rather than an actual value?
i.e. if you retire on 1st January 2008?

This is quite common and would lead to different values as one is the value of the pension now and the other is the value projected at 7% growth for the remaining months.

It was based on retirement commencing 01/01/2008.

benny5

EdInvestor wrote: »

Who is the pension provider? Some of them are actually not looking for annuity business, and thus their quotes are low compared with the competition to encourage you to shop around.

Its with Blackrock (Ex Merrill Lynch)

dunstonh

When you get your open market option quotes then, make sure you use 1st January as the commencement date so the correct basis is used for your age. Many providers have monthly steps in annuity rates. Others have quarterly, half yearly or yearly. It can make a difference if you miss out on a higher rate because a few weeks difference existed on the start date.

betheebee

I have been looking for Omo for my husband who retires on 12/1/08 I was hoping I could be able to view a list of offers, a bit like car insurances where they list the price but hey, it's not that simple. I don't know where to start, although I googled omo I got a list of financial advisors. Does anyone know of an easier road to go down? any help greatfully appreciated

dunstonh

I could be able to view a list of offers, a bit like car insurances

Car insurance comes under general insurance and has lighter regulation. Annuities come under investment class authorisation and many websites dont hold investment authorisation just general and protection.

Does anyone know of an easier road to go down?

Many companies will only quote through an IFA. Those that offer direct to public dont improve any of the terms but sell at full RRP.

With options like arrears/advance, indexation, frequency, capital buy back, with or without proportion and guarantees, many providers are reluctant to make their product available direct to public. Plus, a number of the providers just cannot afford it (if they do that, they require further FSA authorisation, staff and costs).

Annuities are also low profit with a typical commission of 1%. The paperwork can be a bit nasty with some of them as well. A number of the IFAs with websites havent shown a lot of interest in offering discounted terms unless you have over a certain fund value. There have been some IFA websites posted here in the past but the annuity rates given have either been the standard retail or lower (if provider that enhances terms for high turnover IFAs/networks comes out top). On large fund values they do tend to discount but then most local IFAs would as well as its identical work regardless of fund value.

With this, your choice is use an IFA directly or use an IFA with a website. If your fund value is over £100k after tax free cash, then you should be able to get a little discounting (increasing as the fund value increases).

EdInvestor

benny5 wrote: »

Its with Blackrock (Ex Merrill Lynch)

I don't think they do annuities, do they? Do they have an associated insurance company? Where have the quotes come from?

EdInvestor

betheebee wrote: »

I have been looking for Omo for my husband who retires on 12/1/08 I was hoping I could be able to view a list of offers, a bit like car insurances where they list the price but hey, it's not that simple. I don't know where to start, although I googled omo I got a list of financial advisors. Does anyone know of an easier road to go down? any help greatfully appreciated

Try these for initial comparisons:

www.fsa.gov.uk/tables (the regulators' site)

http://www.h-l.co.uk/pensions_and_retirement/annuities.hl (has an annuity calculator)

www.williamburrows.co.uk (also a lot of info on other options such as drawdown)

benny5

EdInvestor wrote: »

I don't think they do annuities, do they? Do they have an associated insurance company? Where have the quotes come from?

Its arrived via my employer's pension admin people, the AVC part of my pension.

dunstonh

Try these for initial comparisons:

www.fsa.gov.uk/tables (the regulators' site)

http://www.h-l.co.uk/pensions_and_retirement/annuities.hl (has an annuity calculator)

www.williamburrows.co.uk (also a lot of info on other options such as drawdown)

Be wary of using these to make your decision though. Annuity rates change quicker than these sites update and they make a number of assumptions.

You rarely, if ever, find a real annuity quote from a provider comes out at anything like the tables shown. Plus, they assume standard retail pricing with standard commission deduction. In real life, that isnt always the case.

Often you get the top 5 companies on these lists and get real quotes which then changes the order.

They are a guide but thats all. You shouldnt decide which company to use on the basis of static tables.