Pension Annuity Help

gregchinny

My Father In Law is 65 and has £25000 with Royal London sat there since May 2005 waiting for him to reach 65 a few weeks ago.
He has lung cancer, for the last 2.5 years and needs advice what to do.

The options from Royal London are Full Pension, Cash Sum + Reduced Pension, Open Market Option

I have no idea how what his options are

He wants to take a lump sum and an monthly pension but he wont be around for ever, so wants his wife to continue to receive his entitlement, Royal London aren't forthcoming with any options only saying 'death benefits will be paid to your estate and allocated as per your will'#

Any pointers of help would be much appriated!

Thanks

dunstonh

He needs to get an IFA in ASAP. With his health condition he can qualify for an enhanced pension and many of the providers on that front will only deal with IFAs.

The Royal London pension will be based on clean health and will be lower than open market option. RL use Prudential for their annuities so it will be easy for an IFA to beat that.

jamesd

A "full pension" can be any one of a large number of types of pension with differing benefits for the surviving partner, from none (a single life annuity) to 100% (but 100% of a reduced amount compared to single life).

His health and life expectancy are the critical factors here. If it's months to several years, it's possible that he should not take the pension at all but instead borrow money to live on until death. Then his wife would be able to inherit 100% of his pension pot value and could get a single life pension in her own name.

One thing he should not do is buy a standard single life annuity. The basic versions of these stop paying the pension at the date of death and his wife would have no ongoing pension.

If Royal London do not offer an impaired life annuity he should not buy an annuity from them but should use the open market option to get one from someone else. This can greatly increase the pension that he gets. They are normally only available via independent financial advisors so his first stop should be https://www.unbiased.co.uk to find a local IFA who can consider his options with him.

The IFA will be able to consider his life expectancy and advise about whether it's better to take pension benefits now (meaning take any pension or the lump sum) and which annuity would offer the best deal for him, or whether it's better to wait.

Royal London will be absolutely prohibited from giving him any guidance at all about what he should do. They aren't trying to be unhelpful, it's just the way the financial services regulations work. The people he talks to there won't be authorised to give this sort of advice and won't be insured to cover the cost of making up any loss if they gave the wrong advice. An IFA will have both of those and an obligation to give the best advice for the current situation.

dunstonh

I should also add that some of the enhanced annuity providers have a buy back option which can be very useful for those with a shorter life expectancy.

Also, jamesd is correct in that RL are not being unhelpful. They are not authorised to give advice and can only talk to you factually. They would not be able to give options which are available with other providers and they wouldnt say which options are best because that is advice.

EdInvestor

Links to a few IFAs might be worth talking to:

https://www.h-l.co.uk
https://www.annuitybureau.co.uk
https://www.william burrows.co.uk
https://www.justretirement.co.uk

dunstonh

two of those are expensive for advice. The third is execution only (meaning you have to tell them what you want) and the 4th is a product provider that will only deal through IFAs.

I think its clear from gregchinny's post that advice is needed as the FIL doesnt know what to do.

EdInvestor

dunstonh wrote: »

two of those are expensive for advice. The third is execution only (meaning you have to tell them what you want) and the 4th is a product provider that will only deal through IFAs.

Rubbish.

All four have IFA sections.Check their fees when you contact them and shop around.

dunstonh

Rubbish.

All four have IFA sections.

You are wrong.

quote from the website:
The importance of expertise should never be underestimated when it comes to financial planning. That's why we only provide our service through Financial Advisers

EdInvestor

If you're referring to Just Retirement ( a leader in the enhanced annuity business), they have an inhouse IFA section advising on equity release and a partner advising on annuities.

Details

HL have an IFA section advising on everything and an annuity supermarket comparison function.

I don't understand your aversion to specialist IFAs in the retirement area, unless it's because you aren't one yourself.Sending people to unbiased is just as likely to mean they will end up with a salesforce advisor or a mortgage broker who doesn't know what he's doing, what a waste of time, and also possibly money.

dunstonh

If you're referring to Just Retirement ( a leader in the enhanced annuity business), they have an inhouse IFA section advising on equity release and a partner advising on annuities.

Details

No, they have a support team who will take on some of the work for lighthouse advisers. JR will not provide advice to members of the public directly though. Quite a lot of networks offer this service but Lighthouse have chosen to get a provider to do it.

HL have an IFA section advising on everything and an annuity supermarket comparison function.

Have you seen HLs cost for advice?

Also, as I have stated before, the tables are not reliable plus a number of providers will not provide data to appear in the quote portals but require to be contacted manually.

I don't understand your aversion to specialist IFAs in the retirement area, unless it's because you aren't one yourself.Sending people to unbiased is just as likely to mean they will end up with a salesforce advisor or a mortgage broker who doesn't know what he's doing, what a waste of time, and also possibly money.

You arent sending them to specialist IFAs. You are sending them to execution only websites from IFAs. Great for someone that knows what they want and need. No use for someone that hasnt got a clue and needs advice.

Some of these "specialist" IFAs have websites dedicated to certain subjects. That doesnt make them specialist. It makes them IFAs with 5 websites. Also, annuity purchase is not something that really needs any specialisation. The paperwork is heavy, the terminology used is over the top and there are a lot of options but it doesnt require an annuity specialist.

Another reason that I dont see the point of using a website service is that the figures that they offer are no higher and often lower than what you can get from a local IFA belonging to a network. This has been verified in the past by myself and other IFAs on the board. If you are going to do all the work, have limited or no FOS protection and end up with the same or lower income than someone who can visit you, give advice, will do the work for you and give you FOS protection, then what is the point.

Most IFAs do not belong to salesforces and mortgage brokers are not authorised to deal in annuity business.

EdInvestor

dunstonh wrote: »

You arent sending them to specialist IFAs. You are sending them to execution only websites from IFAs.

If only that were so.

Many is the time the lack of execution only discount brokers for annuities has been lamented on this board.,

I'm afraid they are all IFAs.I'd be delighted if they weren't.