Annuity without using financial adviser

DRS1

FIREDreamer said:

DRS1 said:

arthur_fowler said:

HL got 0.5% of the annuity starting pot for mine.

Well done.  I ran my figures through the HL annuity quote and for some reason they came up with a different insurer as top of the tree compared to the other ones I used.  So I did not pursue it.

But how did the rates compare? 

Ah now you're going to tell me I spent more to get a worse rate.  At the time I did not think they were as good but I can't see any notes where I compare them on an apples to apples basis.

arthur_fowler

I didn't consider how much the advisor/broker would get paid when I was choosing who to go with. I looked at how much I would get. 

dunstonh

arthur_fowler said:

I didn't consider how much the advisor/broker would get paid when I was choosing who to go with. I looked at how much I would get. 

Effectively, the less the adviser or broker takes, the more you get.  

FIREDreamer

dunstonh said:

arthur_fowler said:

I didn't consider how much the advisor/broker would get paid when I was choosing who to go with. I looked at how much I would get. 

Effectively, the less the adviser or broker takes, the more you get.  

Not necessarily - special deals might be available? e.g. a broker with high volumes might get a better deal than a cheaper one with low volumes of business.

wjr4

FIREDreamer said:

dunstonh said:

arthur_fowler said:

I didn't consider how much the advisor/broker would get paid when I was choosing who to go with. I looked at how much I would get. 

Effectively, the less the adviser or broker takes, the more you get.  

Not necessarily - special deals might be available? e.g. a broker with high volumes might get a better deal than a cheaper one with low volumes of business.

No, that’s not how it works. 

incus432

In arranging the annuity via the broker I had expected to take the tax free sum from the SIPP provider first but the broker tells me that will be paid out by the insurer as part of arranging the annuity. Is this standard (if so why?) or just a ruse to increase commission by increasing the pot being transferred over?

dunstonh

incus432 said:

In arranging the annuity via the broker I had expected to take the tax free sum from the SIPP provider first but the broker tells me that will be paid out by the insurer as part of arranging the annuity. Is this standard (if so why?) or just a ruse to increase commission by increasing the pot being transferred over?

If you use the open market option method to buy the annuity, the ceding scheme will pay the tax free cash.
If you use the immediate vesting personal pension (IVPP) method to buy the annuity, the receiving scheme will pay the tax free cash.

If you have one ceding scheme, then it doesnt matter which method you use.  If you have multiple ceding schemes being consolidated into the annuity then you should use the IVPP method.

You do need to be on guard in respect of commission/fee and tax free cash.    The quote configurations do allow it to be set as gross or net of TFC.  

zagfles

incus432 said:

In arranging the annuity via the broker I had expected to take the tax free sum from the SIPP provider first but the broker tells me that will be paid out by the insurer as part of arranging the annuity. Is this standard (if so why?) or just a ruse to increase commission by increasing the pot being transferred over?

The rules still seem to be based on pre pension freedoms and the associated bureaucracy, when people usually bought an annuity either from their pension provider, or took the "open market option" and bought the annuity from someone else. It seems that if you choose the OMO then you're still subject to the rules of your pension scheme, and if you change your mind your pension scheme is still on the hook. So they may delay paying the PCLS. 

But the alternative is to transfer the entire pension, so they'd transfer to what the call an "immediately vesting personal pension" and they pay your PCLS from that and buy the annuity. It seems that because you're transferring the entire pension they're off the hook for everything. 

It's all probably irrelevant for SIPPs but may make a difference with workplace pensions etc. 

BTW see this thread Index linked gilts and index linked annuities: are you moving money into them, yea or nay? - Page 3 — MoneySavingExpert Forum

There's a "gilts ladder" tool mentioned https://lategenxer.streamlit.app/Gilt_Ladder , which even if you've already decided on the fixed term annuity, may at least give an idea whether the annuity is good value or not by comparing what a gilts ladder paying the same income would have cost (it's very slow to load but looks good, giving a detailed cashflow). 

incus432

dunstonh said:

incus432 said:

In arranging the annuity via the broker I had expected to take the tax free sum from the SIPP provider first but the broker tells me that will be paid out by the insurer as part of arranging the annuity. Is this standard (if so why?) or just a ruse to increase commission by increasing the pot being transferred over?

If you use the open market option method to buy the annuity, the ceding scheme will pay the tax free cash.
If you use the immediate vesting personal pension (IVPP) method to buy the annuity, the receiving scheme will pay the tax free cash.

If you have one ceding scheme, then it doesnt matter which method you use.  If you have multiple ceding schemes being consolidated into the annuity then you should use the IVPP method.

You do need to be on guard in respect of commission/fee and tax free cash.    The quote configurations do allow it to be set as gross or net of TFC.  

Thanks. It is one ceding scheme (AJ Bell). I won't know about commission basis until we get the underwritten quote for the selected insurer. If it turns out to be on the whole pot inc TFC is it worth challenging?

incus432

zagfles said:

The rules still seem to be based on pre pension freedoms and the associated bureaucracy, when people usually bought an annuity either from their pension provider, or took the "open market option" and bought the annuity from someone else. It seems that if you choose the OMO then you're still subject to the rules of your pension scheme, and if you change your mind your pension scheme is still on the hook. So they may delay paying the PCLS. 

But the alternative is to transfer the entire pension, so they'd transfer to what the call an "immediately vesting personal pension" and they pay your PCLS from that and buy the annuity. It seems that because you're transferring the entire pension they're off the hook for everything. 

When you talk about the pension scheme beong on or off the hook, what for? Is it about cancellation rights?