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Current annuity rates

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  • So, used an IFA to purchase our drawdown plans which was around £4k and if we wanted to change to annuities another few £k.
  • westv
    westv Posts: 6,445 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    zagfles said:
    I suspect the recent very brief period where annuities were good value has just ended - looks like yields on most index linked gilts have gone or are close to negative again. Despite today's events!

    Index linked aren't the only gilts used though.
  • “Its my job” is a killer argument for any consultant looking for a client.  However its my money in the UK and I get to decide who I hire for my money. 
  • dunstonh
    dunstonh Posts: 119,634 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    So, used an IFA to purchase our drawdown plans which was around £4k and if we wanted to change to annuities another few £k.
    That would be expected if you are paying on a transactional basis.  It may also be expected if on servicing where billing is for the year ahead (often the figure would equate to the annual one).

    “Its my job” is a killer argument for any consultant looking for a client.  However its my money in the UK and I get to decide who I hire for my money. 
    Getting the right person for any job is important.     Try ringing up a plumber and asking them to build you a house and see how far you get.






    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • zagfles
    zagfles Posts: 21,412 Forumite
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    westv said:
    zagfles said:
    I suspect the recent very brief period where annuities were good value has just ended - looks like yields on most index linked gilts have gone or are close to negative again. Despite today's events!

    Index linked aren't the only gilts used though.
    For index linked annuities they are. They must be otherwise there'd be substantial risk.
    I can't see the point in ever buying a flat annuity. Just look at recent inflation. Look at the 1970's. If you're happy with risk you may as well drawdown, if you want a safe guaranteed income, buy an index linked annuity. I can't see the point in a flat annuity.

  • zagfles
    zagfles Posts: 21,412 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Chutzpah Haggler
    wjr4 said:
    Something like an annuity… Its an irreversible decision. There is a surprising number of options.  Personally I would either read lots and lots or consult a specialist. Ideally both. And brokers like IFAs do get special rates. Personally I would look for an annuity specialist rather than just a generic advisor. And it’s easy to compare to see if you got a good deal. 
    You don’t need an annuity specialist. IFAs are fine to deal with annuities. 
    So all IFAs are in agreement on this. Surprising, eh? 

    You may well be right but my opinion is that it should be an annuity specialist. Who may or may not be an IFA. As a customer I only care that he/she knows the subject in great depth and has access to whole of the market. I would use references and learn enough to evaluate the advisor is indeed meeting my needs. And pick the best option out of advised recommendations. 

    There are a lot of options and issues that need to be covered, eg income annuities, variable, fixed index, deferred, partial annualization, handling of legacy, insurance, guaranteed payout, tax; risk management, pooling and premium, credit risk, etc. There is quite a bit of maths behind it (eg Monte Carlo analysis to properly understand risk premium).  

    I believe you but still have some residual scepticism that every IFA knows all there is to know about annuities. 
    Always worth checking IFAs for any upheld complaints against them on the FO site


  • westv
    westv Posts: 6,445 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 20 October 2022 at 4:44PM
    zagfles said:
    westv said:
    zagfles said:
    I suspect the recent very brief period where annuities were good value has just ended - looks like yields on most index linked gilts have gone or are close to negative again. Despite today's events!

    Index linked aren't the only gilts used though.
    For index linked annuities they are. They must be otherwise there'd be substantial risk.
    I can't see the point in ever buying a flat annuity. Just look at recent inflation. Look at the 1970's. If you're happy with risk you may as well drawdown, if you want a safe guaranteed income, buy an index linked annuity. I can't see the point in a flat annuity.

    Back in the day weren't most annuity purchases level rather than index linked??
    Even with index linked there's a risk that you might end up with less overall income in your retirement compared to level.
  • zagfles
    zagfles Posts: 21,412 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Chutzpah Haggler
    westv said:
    zagfles said:
    westv said:
    zagfles said:
    I suspect the recent very brief period where annuities were good value has just ended - looks like yields on most index linked gilts have gone or are close to negative again. Despite today's events!

    Index linked aren't the only gilts used though.
    For index linked annuities they are. They must be otherwise there'd be substantial risk.
    I can't see the point in ever buying a flat annuity. Just look at recent inflation. Look at the 1970's. If you're happy with risk you may as well drawdown, if you want a safe guaranteed income, buy an index linked annuity. I can't see the point in a flat annuity.

    Back in the day weren't most annuity purchases level rather than index linked??
    Even with index linked there's a risk that you might end up with less overall income in your retirement compared to level.
    What's the point of buying an annuity? For most people it's safety, they want a guaranteed income for the rest of their life. If you buy a flat annuity, that's not what you'll get.
    Comparisons with total overall income misses the point. Obviously you could be better off overall with a flat annuity, depending on how long you live, future inflation rates etc. Equally you could be better off with drawdown. But with both you're taking a risk. What if inflation stays high for a decade, like in the 1970s? Or like other countries today, goes even higher?
    Buying a flat annuity just replaces investment risk with inflation risk. If you want a guaranteed real income, index linked annuity is the only way to go. If you want to take a risk, then why not just drawdown? Personally I have more faith in equities to maintain real value long term than the pound!

  • westv said:
    zagfles said:
    westv said:
    zagfles said:
    I suspect the recent very brief period where annuities were good value has just ended - looks like yields on most index linked gilts have gone or are close to negative again. Despite today's events!

    Index linked aren't the only gilts used though.
    For index linked annuities they are. They must be otherwise there'd be substantial risk.
    I can't see the point in ever buying a flat annuity. Just look at recent inflation. Look at the 1970's. If you're happy with risk you may as well drawdown, if you want a safe guaranteed income, buy an index linked annuity. I can't see the point in a flat annuity.

    Back in the day weren't most annuity purchases level rather than index linked??
    Even with index linked there's a risk that you might end up with less overall income in your retirement compared to level.
    Yes. It comes down to the risk premium and if its worth it. 

    There are 3 approaches: flat, assumed cost of living adjustment (say 3%) and risk-free CPI inflated annuity.  

    The latter tends to be uncompetitive.  If annuity forms a part of my asset allocation then I might want another component to deal with the risk of having inflation above my assumed COLA. 
  • Albermarle
    Albermarle Posts: 27,786 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    You can always hedge your bets and have a fixed 3% pa increase. More expensive than level but cheaper than inflation link.
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