Annuities

Thrugelmir

westv said:

dunstonh said:

westv said:

dunstonh said:

Kim1965 said:

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

Yes.  They will likely begin to outsell drawdown again.

I'm sure I read that most sales in the past were level annuities. Does make me wonder if a higher income amount but with high inflation is any better or worse than a lower income and very low inflation. 

With a few more interest rate rises and improving gilt yields, indexed annuities could well be better than a 3.5% draw rate on drawdown. 

That will depend on age?
I just had a quick look to see what I'd get for age 60 (it's next year but I just put in that I'm that age now), RPI, 50% survivor and no guarantee period.
1.90% on HL's selector.

What's the fixed level option? 

westv

Thrugelmir said:

westv said:

dunstonh said:

westv said:

dunstonh said:

Kim1965 said:

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

Yes.  They will likely begin to outsell drawdown again.

I'm sure I read that most sales in the past were level annuities. Does make me wonder if a higher income amount but with high inflation is any better or worse than a lower income and very low inflation. 

With a few more interest rate rises and improving gilt yields, indexed annuities could well be better than a 3.5% draw rate on drawdown. 

That will depend on age?
I just had a quick look to see what I'd get for age 60 (it's next year but I just put in that I'm that age now), RPI, 50% survivor and no guarantee period.
1.90% on HL's selector.

What's the fixed level option? 

4.5%     ......

Thrugelmir

westv said:

Thrugelmir said:

westv said:

dunstonh said:

westv said:

dunstonh said:

Kim1965 said:

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

Yes.  They will likely begin to outsell drawdown again.

I'm sure I read that most sales in the past were level annuities. Does make me wonder if a higher income amount but with high inflation is any better or worse than a lower income and very low inflation. 

With a few more interest rate rises and improving gilt yields, indexed annuities could well be better than a 3.5% draw rate on drawdown. 

That will depend on age?
I just had a quick look to see what I'd get for age 60 (it's next year but I just put in that I'm that age now), RPI, 50% survivor and no guarantee period.
1.90% on HL's selector.

What's the fixed level option? 

4.5%     ......

Soon be north of 6% then. 

dunstonh

westv said:

dunstonh said:

westv said:

dunstonh said:

Kim1965 said:

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

Yes.  They will likely begin to outsell drawdown again.

I'm sure I read that most sales in the past were level annuities. Does make me wonder if a higher income amount but with high inflation is any better or worse than a lower income and very low inflation. 

With a few more interest rate rises and improving gilt yields, indexed annuities could well be better than a 3.5% draw rate on drawdown. 

That will depend on age?
I just had a quick look to see what I'd get for age 60 (it's next year but I just put in that I'm that age now), RPI, 50% survivor and no guarantee period.
1.90% on HL's selector.

That is now.  However, as rate rises continue, then it will change.    

westv

dunstonh said:

westv said:

dunstonh said:

westv said:

dunstonh said:

Kim1965 said:

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

Yes.  They will likely begin to outsell drawdown again.

I'm sure I read that most sales in the past were level annuities. Does make me wonder if a higher income amount but with high inflation is any better or worse than a lower income and very low inflation. 

With a few more interest rate rises and improving gilt yields, indexed annuities could well be better than a 3.5% draw rate on drawdown. 

That will depend on age?
I just had a quick look to see what I'd get for age 60 (it's next year but I just put in that I'm that age now), RPI, 50% survivor and no guarantee period.
1.90% on HL's selector.

That is now.  However, as rate rises continue, then it will change.    

Yes I know that.
I was responding to your mention of the possibility of +3.5% index linked annuity rates in the near(?) future. 

Albermarle

TELLIT01 said:

On a small pension pot couldn't the admin costs of drawdowns outweigh the benefits of the flexibility?

With wrong provider and the wrong funds , the costs could be significant .
However it is possible to have a cost  of around 0.5% to 0.6% all in , even for a small pension pot. 

Kim1965

So once the annuity has been taken out, the income from that point is not affected by market volitilty etc?
 I can see why the simplicity of an annuity would appeal to the financially inept.
So do annuity rates tend to follow inflation? Do we ever get decent annuity rates at times of low inflation? 

Kim1965

So once the annuity has been taken out, the income from that point is not affected by market volitilty etc?
 I can see why the simplicity of an annuity would appeal to the financially inept.
So do annuity rates tend to follow inflation? Do we ever get decent annuity rates at times of low inflation? 

dunstonh

So once the annuity has been taken out, the income from that point is not affected by market volitilty etc?

There are some annuity types you can buy that have an investment element but the main ones do not.

So do annuity rates tend to follow inflation?

You have have level, CPI indexation, RPI indexation (both with or without floors in case of deflation) or fixed indexation,

 Do we ever get decent annuity rates at times of low inflation? 

The main drivers with annuity rates are mortality and gilt yields.   Low interest rates and low inflation hurt gilt yields which hurt annuities.    Higher interest rates and inflation improve gilt yields and improve annuity rates.

Thrugelmir

Kim1965 said:

 I can see why the simplicity of an annuity would appeal to the financially inept.

The word guaranteed isn't synonymous with stock market investing.