Annuity question

Silvertabby

ncol2008 said:

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.

Your FIL must have signed something - I can't see how the company could have started the payments without that.  As he only retired a couple of years ago, his options letter would have/should have been something like garmeg's example rather than the one I quoted.

If you can't find copies of the paperwork in your FIL's home, then try asking the pension company for copies of his signed election.  That may put your mind at rest that they acted in accordance with your FIL's wishes, even if it is no comfort to your MIL.

Sadly, speaking as a retired LGPS administrator, I do know that many 'non pensions savvy' people out there just look at the figures and ignore the explanations.

garmeg

ncol2008 said:

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

That would have been from the original insurance company that held the pension.

If it was transferred elsewhere he would have taken option (1) or (2).

The annuity provider should have provided quotes in line with (3) - (6) above and possibly (7) before setting up the annuity.

dunstonh

Your FIL must have signed something - I can't see how the company could have started the payments without that. 

Correct.  No annuity provider will take on an annuity without signatures.
There are three ways to do it.
1 - In-house option with the existing provider (sometimes uses a third party annuity provider) -  Usually a menu of options is given and told to seek independent advice as well as booklet explaining the range of options available generically.  The person buying is in control of the annuity options selected.
2 - Use an IFA.   Multiple signatures required and a report into why an option was chosen and potential suitable alternatives were not. - this option gives the most consumer protection as advice needs to be best advice (although the person can overrule the adviser but that would be documented as such).  The IFA should quote on what they feel is best (and often that means also doing multiple methods and showing the multiple quotes for each in a table on the report).
3 - Use a third party annuity provider via a website.  Still needs signatures.  These are done as instruction only and do not provide advice.  So, you need to tell them what you are after and that is what they will provide.  If you dont ask for joint quotes they wont provide joint quotes.  The person buying the annuity is in control of the decision making.

zagfles

ncol2008 said:

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.

That's how annuities work! That's the point of them. They pool life expectancy, they pay out based on expected life expectancy and those who live to 100 get more out than they put in, and those that die after a couple years get far less out than they put in. The state pension is the same, those who paid NI all their life and die before state pension age get nothing and those who live to 110 get far more out than they paid in. Same as defined benefits pensions.

Annuities have always had the option to provide for a spouse, so looks like he didn't take that option.

LHW99

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.

You are checking she is receiving the right amount of pension? I don't know how things work, but this may be relevant

https://www.thisismoney.co.uk/money/pensions/article-5585425/What-state-pension-married-woman-retirement.html

The DWP is usually helpful

ncol2008

Thanks for all you comments, I will check the paperwork, but at least we know the most likely general outcome will be theres no cause for complaint, and I hadn’t  really thought if it in terms of NI and how much you pay in over a lifetime, which put the issue into context.  Thanks all for taking the time to comment, its much appreciated.

barnstar2077

If your MIL is still struggling financially it maybe worth looking into possible benefits.  There is a benefits section of the MSE forum.

Marcon

ncol2008 said:

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.

That's the gamble you take if you buy an annuity. You might die soon and 'lose out'; or you might live to an exceptional age and the annuity provider 'loses out'.
 
If he only drew on his annuity for two years before this death, check the paperwork for a 'guarantee period'.  This guarantees that income payments will be made for a minimum period of time, even if the annuity holder dies soon after purchasing the annuity.  The most common guarantee period is 5 years, so it could well be that your MIL might benefit from this. Payments might continue on a regular monthly basis, or the 'outstanding' payments would be paid as one lump sum. Again, it will depend on the paperwork.

elouise01582

If your MIL paid a low level of NICs is it worth asking if her state pension entitlement can be based upon her late husband's national insurance contribution history.  I know this has pretty much been phased out with the new state pension rules in 2016 but might it be worth checking?