Annuity - should be simple

wjr4

dunstonh said:

So, I fed the details into moneyhelper, and I found that Standard Life (SL) is the best for me. This was great so far and I was ready to go ahead.

For SL to come out top is unusual.     Although moneyhelper tables are often different to the commercial quote engines used by IFAs.  Plus, SL do hit a particular niche.  i.e. you seem them nowhere in the comparisons and then out of the blue a certain set of circumstances (more often no health or lifestyle declarations) and they do better.

Standard Life have actually come out top for me for clients with no health issues, it was very random though as I’ve not seen them top in my career!

sgx2000

dunstonh said:

sgx2000 said:

Dunstonh
What are your thoughts on an individual going straight to a pension provider via HL?

For clarification, you wouldn't be going straight to a pension provider via HL.    HL will use the same method IFAs use except it will be streamlined for non-advised direct-to-client (assuming you don't mean their advice service - which will have the same requirements that an advised service from an IFA would have).

I am sure HL would do a very good job.   I have sent the odd enquiry their way when the amounts were not viable for me to do it.
I have only been up against HL on two occasions and on one of them we got pretty much identical figures and on the other we got higher (despite our fee being higher than their commission).   I put that down to medical details disclosure being better as I didn't accept the medical questions given but probed and got quite a bit more than was given initially and the rate improved significantly.  Plus, we used a provider that was one that is known to usually offer better rates when you go via their broker consultants and has a margin to improve terms.    I would imagine HL's advice service would have done similar but their direct to consumer service didn't as, being non-advised, it accepted what the individual had given them and the rates generated.

My most recent case also saw a new client using us and one of the other major online sites for annuities.  We initially quoted around £8500 to get a starting point and the online site quoted £12,000.    I could see immediately, that the online site had just done the basic "has medical conditions" quote which automatically goes to the best rate possible and there was no way they were going to get that.   The client went on to give us the same information (which was woefully inadequate with lots of gaps) and the quotes came in similar at around £8700.   I got ours upto just under £9600 in the end and it was a hard slog as the person was reluctant to answer the medical conditions in many of the areas where the data improves the rates.  It took a lot of manual intervention and discussion.   I reckon that is probably the main area where advised can beat non advised.     

if its clean health cases, then the margins of differences are going to be tiny unless its a large case where the IFA caps their fee and the online service doesnt cap their commission.

Dunstonh

Thank you for your reply - always very informative....

So, are you saying that if HL give an online quote based upon the online medical conditions reported
they would not stick to that price??

dunstonh

So, are you saying that if HL give an online quote based upon the online medical conditions reported
they would not stick to that price??

No.    The price obtained will be on the medical conditions reported.   However, there will be no attempt for the online systems to find out gaps in the medical information.  The quote will be based on what information was given. 

Annuity quotes for medical conditions can never be lower because of the information supplied.   Any information given will either increase the annuity rate or leave it the same.       So, incomplete medical data can only result in no change or lower annuity rates compared to more comprehensively supplied info.

However, the caveat is that one of the other major online sites has a quote option where it just asks if you have medical conditions and if you say yes, it gives the highest possible outcome without asking any medical details.   You wont get that rate when it comes to applying.    That functionality was never designed to be used without an adviser.  It was to show the difference between not getting medical data and what you could get if you did.  i.e. the min and the max.  It was to encourage people to give the medical info.  Not to be used in front line quoting.

sgx2000

dunstonh said:

So, are you saying that if HL give an online quote based upon the online medical conditions reported
they would not stick to that price??

No.    The price obtained will be on the medical conditions reported.   However, there will be no attempt for the online systems to find out gaps in the medical information.  The quote will be based on what information was given. 

Annuity quotes for medical conditions can never be lower because of the information supplied.   Any information given will either increase the annuity rate or leave it the same.       So, incomplete medical data can only result in no change or lower annuity rates compared to more comprehensively supplied info.

However, the caveat is that one of the other major online sites has a quote option where it just asks if you have medical conditions and if you say yes, it gives the highest possible outcome without asking any medical details.   You wont get that rate when it comes to applying.    That functionality was never designed to be used without an adviser.  It was to show the difference between not getting medical data and what you could get if you did.  i.e. the min and the max.  It was to encourage people to give the medical info.  Not to be used in front line quoting.

Once again,  Many thanks Dunstonh...

I have been toying with the idea of getting an annuity 2 years early while the rates are high.
Obviously missing out on any potential gains in the pension fund in the final 2 years....

I really do hate making decisions that are a coin toss....
The returns on the pension fund could be awful in 2 years, and the annuity rates dropped....

fatwelshbuddha

I'm just jumping in on the tail end of this thread as some of the comments resonate with what my wife and I are looking at.

We have individual SIPPs with large pots (c £150K each) that we want to use to buy an annuity each as we don't feel that our SIPPs are a) performing well enough to keep them active, and b) we are now both 70 so looking for some income for the next periods or our lives and enjoy the money!   We do have significant funds in other investments such as ISAs, premium bonds, and a rental flat that we can realise as needed.   We do not have children so estate planning for inheritance is not a key issue to concern us as our wills outline what happens once we die.

Our SIPPs are with ii (me) and Vanguard (wife) and we were hoping we could avoid an IFA due to previous bad experience when a trusted IFA we had used for years, retired, and sold up to a faceless group who would have no personal interest in us and were charging (in our view) exorbitant fees.  This episode made us IFA wary!!   We later transferred our SIPPs so we could self manage our investments.   We have withdrawn some tax free funds from our SIPPs to help fund a move from England to Wales in 2022 so what's in the current pots need to account for this.

From reading the comments it would seem that we will have to go via an IFA to get a decent annuity deal - is that correct??

Comments are appreciated and if someone could point us to a decent IFA in the Powys area we'd be grateful.

dunstonh

Our SIPPs are with ii (me) and Vanguard (wife) and we were hoping we could avoid an IFA due to previous bad experience when a trusted IFA we had used for years, retired, and sold up to a faceless group who would have no personal interest in us and were charging (in our view) exorbitant fees.  This episode made us IFA wary!! 

What that should tell you is that the FAs that bought the IFA were not as good as an IFA.     However, an annuity purchase is a transactional piece of work. So, its a one off relationship.

From reading the comments it would seem that we will have to go via an IFA to get a decent annuity deal - is that correct??

An IFA could return a better deal.