Annuity companies.

penpon

Hi i am currently looking into buying an annuity , what are the most trusted companies out there , are there any i should avoid ?.
Any advice is appreciated , experiences good or bad , are they generally good at paying out the monthly sums.
I do have an financial advisor doing the work for me but would like some feed back from people that have gone through the process.
Hope i can get some feed back cheers.

dunstonh

Hi i am currently looking into buying an annuity , what are the most trusted companies out there , are there any i should avoid ?.

Pretty much any IFA should be fine in this respect.  It is a bread and butter area and requires nothing special.

Any advice is appreciated , experiences good or bad , are they generally good at paying out the monthly sums.

In terms of the providers, pension income is handled via payroll systems and automated.    No concerns exist with any of them on that front.

I do have an financial advisor doing the work for me but would like some feed back from people that have gone through the process.

If it is an FA, they may not be able to do it or may be restricted.  If its an IFA and the value is over around £30k, then the IFA can be cheaper than going direct.    Going direct still allows the payment of a commission.  The commission tends to be around 2-3%.   That is deducted from within the fund.    An IFA cannot receive a commission.  You pay the fee.  So, if the fee is lower than the commission, the annuity rate should be higher.   So, it's really only on small amounts where you find going direct can be better.    On clean health applications, if the commission and fee was the same, the outcome would be the same.  If you qualify for enhanced terms, then IFA pricing tends to be a little better.   However, the market is not very efficient with annuities any more due to the much lower volume of annuities that are bought nowadays. A lot of companies have pulled out or merged to reduce choice.

It is very unusual to go direct to the provider for an annuity. Some are not set up for it.  It really tends to be IFA or using an online site.   (fee vs commission applies there as the online sites are commission based).

TadleyBaggie

Out of interest, why are you choosing a annuity over a say a SIPP drawdown?

penpon

TadleyBaggie said:

Out of interest, why are you choosing a annuity over a say a SIPP drawdown?

Hi i just want a guaranteed income each month without keeping an eye on how things are performing .
After Brexit and Covid just want to play it safe no gambles hope this makes sense, 

Thrugelmir

Makes perfect sense. Markets have been somewhat less volatile than in the past for some years. The future holds no certainty. 

dunstonh

penpon said:

TadleyBaggie said:

Out of interest, why are you choosing a annuity over a say a SIPP drawdown?

Hi i just want a guaranteed income each month without keeping an eye on how things are performing .
After Brexit and Covid just want to play it safe no gambles hope this makes sense, 

That is what annuities are for.   Whilst drawdown was the big focus of the pension freedom changes in 2015, annuities changed as well. Death benefits were improved.   Prior to that, 10 years was the maximum guarantee period.   Now you can go higher and providers will do 30 years.  There is also value protect where the death benefits can be the original fund value at purchase minus what was paid out in income.       So, if giving up the capital in exchange for income is a concern, there are better options available today.    if you have no beneficiaries and are looking for certainty then again, an annuity can make sense.

The only real issue with a modern annuity is the fact it is linked to interest rates at commencement and interest rates are low.  So, annuity rates are low.   There are short term annuities as an option if you want to hedge your bets on interest rates with some of it.
Also, a lot of people do an annuity and drawdown. e.g. take the secure income (state pension, annuity and any DB pensions) to your minimum required income and then use drawdown for the discretionary income above.

Annuities are not fashionable.   They are certainly suffering in terms of the annuity rate but they do still have a purpose for some people.

zagfles

There are annuity discount brokers who will refund part of the commission they get, may be worth looking into.