Prudential keeping pension pot after death of my father

79lulu

Hi everyone thanks for all the tips and the explanations. I’ve managed to get a whole lot of documentation from prudential and the FA. I can see the FA took 3% commission then 0.5% every year for my dads enhanced annuity. 

Question- he brought the annuity for x amount but once the 10 years is over the annuity would have paid out 60% of the value he purchased it for. Is that normal? 

I will read through the documentation throughly over the weekend and try and understand it. For someone like me it isn’t clear and easy to read let alone understand :-) 

Thanks! 

 

Linton

79lulu said:

Hi everyone thanks for all the tips and the explanations. I’ve managed to get a whole lot of documentation from prudential and the FA. I can see the FA took 3% commission then 0.5% every year for my dads enhanced annuity. 

Question- he brought the annuity for x amount but once the 10 years is over the annuity would have paid out 60% of the value he purchased it for. Is that normal? 

I will read through the documentation throughly over the weekend and try and understand it. For someone like me it isn’t clear and easy to read let alone understand :-) 

Thanks! 

 

Enhanced annuities paying a much higher income than normal are only possible because the pension company has data that indicates that someone with similar medical conditions has a significantly lower life expectancy than normal.  So if they can offer an annuity that repays itself in approx 100/60 X 10=17 years you can be reasonably sure that their data indicate a life expectancy of perhaps 15 years.

dunstonh

I’ve managed to get a whole lot of documentation from prudential and the FA. I can see the FA took 3% commission then 0.5% every year for my dads enhanced annuity. 

Are you sure this is an enhanced lifetime annuity?   There was no ongoing remuneration on the lifetime annuity.  And I have just checked and was told that Pru did not and still does not offer enhanced annuities.  Is it a With Profits annuity?   They did have an ongoing commission as an option (by taking less initial and deferring it as ongoing instead).   Plus, the WP annuity had a three year review built into it which would match the reference on the reason why letter.

However, the commission is irrelevant.   Pru paid the commission.  Your father did not.  He paid charges and the charges and commission with not directly linked.  

Question- he brought the annuity for x amount but once the 10 years is over the annuity would have paid out 60% of the value he purchased it for. Is that normal? 

Basically, the breakeven point on non-enhanced annuities is the average life expectancy.  Those that die early subsidise those that live longer.    With Profits annuities had the potential to pay a bit more and that may well be the case here, subject to your father's age when he bought it based.  Mid 60s would break even around 23 years on a standard annuity.  So, 60% after 10 years indicates either he was older than mid 60s when he bought it or that it was an enhanced annuity or it was a with-profits annuity.

TVAS

Which is why he needs to get a copy of the paperwork to see what was recommended and what was selected. 

You said it isn't the state's job to look into peoples personal relationship but it falls on the state when a surviving spouse is left with nothing which means the rest of us taxpayers when there was plenty of money that they never needed state help in retirement.

dunstonh

There you go.  A copy and paste from a Pru pension letter from 2011

Thrugelmir

79lulu said:

Question- he brought the annuity for x amount but once the 10 years is over the annuity would have paid out 60% of the value he purchased it for. Is that normal? 

Your late father explored the options available to him and that's the one he chose. You need to put yourself in his shoes and in the context of the options then available. Annuities have served a useful purpose for decades in terms of retirement planning. Because they are currently unfashionable doesn't make them totally unsuitable and irrelevant.