Annuity Rates

Spivo46

Sorry, its more than 6% because i have built in an annual increase of 3%. So pretty good

westv

The HLb"best buy" table is still showing 5/10. It is about time they updated it.

ukdw

Spivo46 said:

Sorry, its more than 6% because i have built in an annual increase of 3%. So pretty good

For my situation when I compared a level to a 3% escalating I calculated that it would be year31 before the 3% escalating had completely caught up with the level (in terms of total money paid back me) - which for me is a bit too far away - so I decided to go for level.

Spivo46

ukdw said:

Spivo46 said:

Sorry, its more than 6% because i have built in an annual increase of 3%. So pretty good

For my situation when I compared a level to a 3% escalating I calculated that it would be year31 before the 3% escalating had completely caught up with the level (in terms of total money paid back me) - which for me is a bit too far away - so I decided to go for level.

The 3% fee with LV and £5000 fee with HL is a bit of a killer!

ukdw

Spivo46 said:

ukdw said:

Spivo46 said:

Sorry, its more than 6% because i have built in an annual increase of 3%. So pretty good

For my situation when I compared a level to a 3% escalating I calculated that it would be year31 before the 3% escalating had completely caught up with the level (in terms of total money paid back me) - which for me is a bit too far away - so I decided to go for level.

The 3% fee with LV and £5000 fee with HL is a bit of a killer!

For me it is 1.5% from IFA which is still quite a lot - but only 3 years worth of normal fees on that part of the pension I suppose - after that the annuity is fee free for its minimum 30 year life as far as I know.

dunstonh

ukdw said:

Spivo46 said:

ukdw said:

Spivo46 said:

Sorry, its more than 6% because i have built in an annual increase of 3%. So pretty good

For my situation when I compared a level to a 3% escalating I calculated that it would be year31 before the 3% escalating had completely caught up with the level (in terms of total money paid back me) - which for me is a bit too far away - so I decided to go for level.

The 3% fee with LV and £5000 fee with HL is a bit of a killer!

For me it is 1.5% from IFA which is still quite a lot - but only 3 years worth of normal fees on that part of the pension I suppose - after that the annuity is fee free for its minimum 30 year life as far as I know.

There is just an initial fee or initial commission.

If using an IFA, then, with a lifetime annuity, you really shouldn't let the initial fee get about £3000.  Its a very easy bit of advice.   However, if you have a lot of medical conditions, this is where the IFA can earn their money.    If its a fixed term annuity, then the work is a bit more for an IFA but again, the fee should be less than £5000.

Some will be greedy. Some may price high as they don't want to do it.   However, others will see it as a straightforward transactional case.

Spivo46

For me it is 1.5% from IFA which is still quite a lot - but only 3 years worth of normal fees on that part of the pension I suppose - after that the annuity is fee free for its minimum 30 year life as far as I know.

There is just an initial fee or initial commission.

If using an IFA, then, with a lifetime annuity, you really shouldn't let the initial fee get about £3000.  Its a very easy bit of advice.   However, if you have a lot of medical conditions, this is where the IFA can earn their money.    If its a fixed term annuity, then the work is a bit more for an IFA but again, the fee should be less than £5000.

Some will be greedy. Some may price high as they don't want to do it.   However, others will see it as a straightforward transactional case.

I think Canada Life are free of charge if you go direct and they appear to be the best rates also. however, the trust pilot reviews are shocking

ukdw

dunstonh said:

There is just an initial fee or initial commission.

If using an IFA, then, with a lifetime annuity, you really shouldn't let the initial fee get about £3000.  Its a very easy bit of advice.   However, if you have a lot of medical conditions, this is where the IFA can earn their money.    If its a fixed term annuity, then the work is a bit more for an IFA but again, the fee should be less than £5000.

Some will be greedy. Some may price high as they don't want to do it.   However, others will see it as a straightforward transactional case.

Thanks - spookily the fee does work out as exactly £3k - I'm happy with it at that level (or the effective £1.8k net that I think of it as costing me) - as there is quite a lot of work required with the rest of the pension to get it into a position to allow this sort of partial annuity purchase.   

It is a normal partial annuity, medically enhanced with a 30 year guarantee - at a rate of 6%.  I quite like the idea of 30 year guarantees - as they don't seem to add that much to the cost and ensure you (or your estate) definitely get back a fair bit more than you put in (at least an 80% total return over 30 years in this case).    

I quite like the idea of partially replacing a 3.5%-5% 'safe withdrawal rate' with a 6% 'guaranteed income' - although I know it is not a completely fair comparison as the 3.5%-5% sometimes includes inflation rises.

DT2001

ukdw said:

dunstonh said:

There is just an initial fee or initial commission.

If using an IFA, then, with a lifetime annuity, you really shouldn't let the initial fee get about £3000.  Its a very easy bit of advice.   However, if you have a lot of medical conditions, this is where the IFA can earn their money.    If its a fixed term annuity, then the work is a bit more for an IFA but again, the fee should be less than £5000.

Some will be greedy. Some may price high as they don't want to do it.   However, others will see it as a straightforward transactional case.

Thanks - spookily the fee does work out as exactly £3k - I'm happy with it at that level (or the effective £1.8k net that I think of it as costing me) - as there is quite a lot of work required with the rest of the pension to get it into a position to allow this sort of partial annuity purchase.   

It is a normal partial annuity, medically enhanced with a 30 year guarantee - at a rate of 6%.  I quite like the idea of 30 year guarantees - as they don't seem to add that much to the cost and ensure you (or your estate) definitely get back a fair bit more than you put in (at least an 80% total return over 30 years in this case).    

I quite like the idea of partially replacing a 3.5%-5% 'safe withdrawal rate' with a 6% 'guaranteed income' - although I know it is not a completely fair comparison as the 3.5%-5% sometimes includes inflation rises.

I like the concept of partial annuitisation as it gives you diversification of income source. The other alternative I looked at was long term gilts including some sort of gilt ladder to be timed to planned reduced expenditure (less travel). The returns are lower but you still have the capital (although eroded by inflation).
With the 30 year guarantee how does it ‘work’ in respect of your estate - do you get to specify who gets the income (or is it a letter/deed of wishes), presumably that is taxable at their marginal rates and the value of the income stream is treated as outside your estate for IHT as it has originated from a pension?

ukdw

DT2001 said:

u

I like the concept of partial annuitisation as it gives you diversification of income source. The other alternative I looked at was long term gilts including some sort of gilt ladder to be timed to planned reduced expenditure (less travel). The returns are lower but you still have the capital (although eroded by inflation).
With the 30 year guarantee how does it ‘work’ in respect of your estate - do you get to specify who gets the income (or is it a letter/deed of wishes), presumably that is taxable at their marginal rates and the value of the income stream is treated as outside your estate for IHT as it has originated from a pension?

Yes I agree - plus it allows the remaining drawdown fund to be increased.

I do like the idea of the sort of stuff that 'pension craft' suggested about Gilt ladders too.

Re the Annuity and Tax - I think how it is handled depends on the scheme.  The one I tried to get  last year had an IHT implication (for the remaining guarantee which I wasn't too concerned about)  and presumably tax too for the beneficiaries - who are just normal nominations I think.

The one I am going for now has some sort of ability to remain linked to the drawdown fund - so my beneficiaries (in the sad but likely event that I don't last 30 years) may  be able to avoid some of the IHT and tax implications.