*Symmetrical* Joint Annuities??

FIREDreamer

Secret2ndAccount said:

Purchase two annuities. Use 67% to buy an annuity with 100% survivor benefits. Use 33% to buy one with zero survivor benefits. The second part is cheaper so you get a higher overall monthly payout. If you die, you have achieved exactly what you want, and the wife is left with 67%. If she dies, you have 100%. It's pretty close. You might have to spend the extra monthly income on presents for your wife...

That’s the same as buying one with 66% spouse in the first place …

Malthusian

Aleward said:

Help!  
I have a pension pot to invest in an annuity (after tax free take of 25% etc).  I know all about making it inflation linked, guaranteed income etc etc, and about providing for a loved one.  THE PROBLEM: What I want is an annuity that pays X until one of us dies, and then pays 2/3 to the survivor until they (whether it's me or my wife) dies. Try as I might, I can't find any offering, or any discussion, of what seems to me a simple proposition.  I know I can buy an annuity that pays my wife 50-67-100% after my death.  What I can't find is one that would pay ME less (50-67-100) after HER death, if she were first to go (i.e. symmetrical between us).  These exist in the US, but not a word about it in the UK.  Why?

Because the pensions system goes back to the Victorian era and beyond, and is built on the assumption that men go to work and men earn the pension. Their wives live off their husbands' income both in working life and retirement. In the event the wife dies first, the widower needs 100% of his income to continue so that he can attract a new wife. If it went down to 67% or 50% he may have enough to live on himself, but he would not have enough income to support a new partner, so it would be inadequate for his needs. Likewise merry widows do not need a higher income in order to support a new husband, because any such husband would have income of his own.

Source: I made that all up.

Even so, it does seem likely to be one of those patriarchal hangovers, like how widows with NHS pensions could previously be effectively prevented from remarrying as they would lose their widow's pension.

In the statistically average case the additional income from sacrificing 33% of the income on the death of the "dependent" would be very small, because the actuary's assumption would be that the annuitant would die first anyway.

Finally, bear in mind that the spouse's State Pension will usually be lost in full on death, and this is likely to have a much larger impact than in þe olden days. So you may not want to lose any additional income on their death on top of that.

Secret2ndAccount

Agreed. I didn't know there was such a wide range of choices available

ukdw

I think you could achieve what you want by
1. using 66% of your  pension funds to purchase a joint 50% RPI annuity
2. draw down the remaining 33% (in a tax efficient way possibly over a few years) and then use it to purchase a single life RPI purchased life annuity in your partners name.

That way if you die first your partner will be left with their 33% annuity, plus another 33% from the joint annuity.

If your partner dies first you will be left with your 66% annuity.

May have to tweak the percentages slightly to take into account the different annuity rates available and tax etc.

Aleward

ukdw said:

I think you could achieve what you want by
1. using 66% of your  pension funds to purchase a joint 50% RPI annuity
2. draw down the remaining 33% (in a tax efficient way possibly over a few years) and then use it to purchase a single life RPI purchased life annuity in your partners name.

That way if you die first your partner will be left with their 33% annuity, plus another 33% from the joint annuity.

If your partner dies first you will be left with your 66% annuity.

May have to tweak the percentages slightly to take into account the different annuity rates available and tax etc.

Thank you!  You are the first to get your head round the actual problem, and suggest a solution that appears to work, albeit with complications.  I will look into doing this.  Many thanks.  

Aleward

Malthusian said:

Aleward said:

Help!  
I have a pension pot to invest in an annuity (after tax free take of 25% etc).  I know all about making it inflation linked, guaranteed income etc etc, and about providing for a loved one.  THE PROBLEM: What I want is an annuity that pays X until one of us dies, and then pays 2/3 to the survivor until they (whether it's me or my wife) dies. Try as I might, I can't find any offering, or any discussion, of what seems to me a simple proposition.  I know I can buy an annuity that pays my wife 50-67-100% after my death.  What I can't find is one that would pay ME less (50-67-100) after HER death, if she were first to go (i.e. symmetrical between us).  These exist in the US, but not a word about it in the UK.  Why?

Because the pensions system goes back to the Victorian era and beyond, and is built on the assumption that men go to work and men earn the pension. Their wives live off their husbands' income both in working life and retirement. In the event the wife dies first, the widower needs 100% of his income to continue so that he can attract a new wife. If it went down to 67% or 50% he may have enough to live on himself, but he would not have enough income to support a new partner, so it would be inadequate for his needs. Likewise merry widows do not need a higher income in order to support a new husband, because any such husband would have income of his own.

Source: I made that all up.

Even so, it does seem likely to be one of those patriarchal hangovers, like how widows with NHS pensions could previously be effectively prevented from remarrying as they would lose their widow's pension.

In the statistically average case the additional income from sacrificing 33% of the income on the death of the "dependent" would be very small, because the actuary's assumption would be that the annuitant would die first anyway.

Finally, bear in mind that the spouse's State Pension will usually be lost in full on death, and this is likely to have a much larger impact than in þe olden days. So you may not want to lose any additional income on their death on top of that.

Thanks for that!  All very credible historical guessing.  And good points about the minimal practical impact of sacrificing 33% of my income if my wife dies first, and on loss of state pension.