Annuity question

ncol2008

Hi, I am hoping someone could advise on the following.
My father in law paid into a  private  pension for years, on his retirement he withdraw it all and bought an annuity.  The issue is, is that he only bought a single person’s annuity, my in laws didnt know he could buy a joint one.  He died shortly after, leaving several thousands in the account, which, the provider has basically said my mother in law cant draw out as it was only in his name.  It doesnt seem fair to me that their circumstances werent assessed.  My mother in law, now has very little to live on, after her bills, barely enough for food. She is getting pension credit etc, but not helped by the fact she didnt pay full NI while she  was working as she paid the married womans amount.
Has she cause for complaint?
Thanks!

Dazed_and_C0nfused

If he bought an annuity why is there "several thousands in the account"?

Why didn't he use it all to buy the annuity?

Albermarle

The issue is that a joint one would have produced a lower annual income for the same amount of money. By buying a single one , he got a higher income whilst alive but his wife is left with nothing . So there is nothing actually wrong with the annuity he bought , that is how they work.
There could be a question of how he was sold the annuity and if he was properly informed. You will have to look at the paperwork in detail,  Maybe he was sent all the info but did not read it?

Thrugelmir

ncol2008 said:

 The issue is, is that he only bought a single person’s annuity, my in laws didnt know he could buy a joint one. 

I'd suggest that this is difficult to prove now that he has passed away. Who knows what conversations were had. Easy with hindsight to suggest that a different route should have been taken. 

Silvertabby

Some 20 odd years ago, a neighbour asked me to have a look at his annuity offer letter.

Can't remember the exact wording, but it was something along the lines of:

Your pension fund is £XXX.  The maximum pension this will buy you is £X per month.  Other options are available, but these will give you a lower monthly pension - please contact us if you require any further information'.

His question was, if £X is the highest possible pension I can get, why on earth would I ask for a lower payment?

He was married.  So I told him.

I believe that the pension companies have since cleaned up their acts, but it still happens that the pensioner just looks for the highest option and plumps for that, without reading the small print.

ncol2008

Thanks for your replies. The account I refered to is the actual annuity.  He only drew on it for 2 years before he passed, so my terminology is incorrect, but what I meant was he only got back a tiny fraction of what he put in. From what my MIL says, there was no assessment what so ever into their circumstances.  I was hoping there was a way she could get somerhing back, to help her out.

ncol2008

apologies...something back.

Silvertabby, it my understanding there wasnt even an option of a lower or higher amount, but as Albermarle says, I need to look at the paperwork to see what that says.  If my MILs recollection is correct, it was a case of my FIL contacting a provider  saying he  wanted to buy an annuity, and them selling him one, without  discussing circumstance or other options.

garmeg

Silvertabby said:

Some 20 odd years ago, a neighbour asked me to have a look at his annuity offer letter.

Can't remember the exact wording, but it was something along the lines of:

Your pension fund is £XXX.  The maximum pension this will buy you is £X per month.  Other options are available, but these will give you a lower monthly pension - please contact us if you require any further information'.

His question was, if £X is the highest possible pension I can get, why on earth would I ask for a lower payment?

He was married.  So I told him.

I believe that the pension companies have since cleaned up their acts, but it still happens that the pensioner just looks for the highest option and plumps for that, without reading the small print.

The "maturity / retirement option packs" for pensions that I have seen from life companies include the following quotes

(1) Maturity Value - for transfer elsewhere in one go into a SIPP or whatever
(2) 25% PCLS and 75% OMO amounts (the latter to buy an annuity elsewhere)
(3) Single Life Level annuity - including and excluding PCLS (with 5 year guarantee)
(4) Joint Life Level annuity (50% spouse) - including and excluding PCLS (with 5 year guarantee)
(5) As (3) but with 3% escalation
(6) As (4) but with 3% escalation
(7) Blank options sheet where you can select PCLS, Spouse Proportion, Guarantee Period and Escalation required to get a further quote.

This seems pretty comprehensive, but may be quite a new innovation.

ncol2008

Thank you, thats really useful, I will check that is in the paperwork

ncol2008

garmeg one other question, would the above quotes come from his original pension provider or the one he invested in, following  withdrawal of his pension to the annuity provider? Thank you

dunstonh

 He died shortly after, leaving several thousands in the account, 

Unless he bought a short term annuity then there wouldn't be thousands in an account.   You give up the capital in exchange for a guaranteed income for life.

It doesnt seem fair to me that their circumstances werent assessed. 

Did he ask for someone to assess his circumstances?    

Has she cause for complaint?

She does if there was someone providing advice.  There is not if he did the transaction without advice.

Pretty much all the providers state that you should seek independent advice and that there are a range of options available.  They explain the options generically and may provide some examples and give the chance to get further quotes on alternative options.    Going DIY with an annuity purchase is rarely best value.  However, lots of people do it anyway.