Better rate for bigger £ annuity?

coyrls

arthur_fowler said:

FIREDreamer said:

I have some experience of annuity rate coding.

Larger pots will generally get a worse annuity rate than smaller pots (though there will be some adjustment for fixed initial fees and ongoing fees).

Whilst this may be counter intuitive - if you think about it, it makes sense.

People with larger pots will obviously be more affluent (having been able to save more) and will be deemed to be of a higher / healthier demographic with a higher life expectancy.

Of course it depends on the provider …

Level annuity, male 60, monthly in arrear with no guarantee period.

£100k purchase money



£1M purchase money

Look at Standard Life

£100k gets you £6,414.60 so £1M should get you ten times this, i.e. £64,146.00 but they only quote £63,880.92.

Other providers pay more than 10 times the £100k figure and others wont quote at all.

Very interesting, thanks!

Although not a fixed rule, Scottish Widows offer a better rate for the larger sum.

Albermarle

LHW99 said:

if you did buy two separate annuities, you could eg delay one for 10 years, whereby age could increase the amount. But that would depend on whether one could give you enough income for now.

Or alternatively the OP could buy both now, but on different terms. For example one level annuity and one with increases. Or one with guarantees if you die in 5 years and one not.
A way to hedge their bets.

arthur_fowler

dunstonh said:

There are also some providers that allow you to buy an annuity within a flexible pension where the income is retained in the pension and not taxed as it is still in the pension.  You then draw the pension income flexibly.   Any unused annuity income can be reinvested or retained in cash.

Oh that's curious. Could you point me to a term to search for or an example provider please? Many thanks 

dunstonh

arthur_fowler said:

dunstonh said:

There are also some providers that allow you to buy an annuity within a flexible pension where the income is retained in the pension and not taxed as it is still in the pension.  You then draw the pension income flexibly.   Any unused annuity income can be reinvested or retained in cash.

Oh that's curious. Could you point me to a term to search for or an example provider please? Many thanks 

I don't believe there is any providers in the DIY market that offer it at this time.  It's an intermediary only option at present.

RogerPensionGuy

For some reference. 

I got a load of annuity quotes a few months back, I used 100K, 200K and 400K with no health issues example and they all essentially gave the same % return, I was surprised the larger amount put in the pot had a tiny negligible difference.

I used two IFAs spending time going over all the details, they produced essentially the same results even though they apparently had special relationships with the providers.

I also used an online company IFA search and it actually gave better results with the same providers, however as mentioned, to get the best rates the online IFA service did require these IFA staff to action the paperwork. 

The two private IFA guys said they could match the online IFA finding service. 

So in my case I think getting more than one annuity products maybe a possibility to allow more personal flexibility over time, but it's more paperwork. 

As I'm posting, I got many PLA quotes, Purchased Life Annuties, now I more understand these PLAs, I would certainly consider PLAs.

Cheers Roger. 

arthur_fowler

RogerPensionGuy said:

For some reference. 

I got a load of annuity quotes a few months back, I used 100K, 200K and 400K with no health issues example and they all essentially gave the same % return, I was surprised the larger amount put in the pot had a tiny negligible difference.

I used two IFAs spending time going over all the details, they produced essentially the same results even though they apparently had special relationships with the providers.

I also used an online company IFA search and it actually gave better results with the same providers, however as mentioned, to get the best rates the online IFA service did require these IFA staff to action the paperwork. 

The two private IFA guys said they could match the online IFA finding service. 

So in my case I think getting more than one annuity products maybe a possibility to allow more personal flexibility over time, but it's more paperwork. 

As I'm posting, I got many PLA quotes, Purchased Life Annuties, now I more understand these PLAs, I would certainly consider PLAs.

Cheers Roger. 

That's really helpful, thank you Roger. I haven't heard of PLA's before. I will need to find out about them.

Albermarle

arthur_fowler said:

RogerPensionGuy said:

For some reference. 

I got a load of annuity quotes a few months back, I used 100K, 200K and 400K with no health issues example and they all essentially gave the same % return, I was surprised the larger amount put in the pot had a tiny negligible difference.

I used two IFAs spending time going over all the details, they produced essentially the same results even though they apparently had special relationships with the providers.

I also used an online company IFA search and it actually gave better results with the same providers, however as mentioned, to get the best rates the online IFA service did require these IFA staff to action the paperwork. 

The two private IFA guys said they could match the online IFA finding service. 

So in my case I think getting more than one annuity products maybe a possibility to allow more personal flexibility over time, but it's more paperwork. 

As I'm posting, I got many PLA quotes, Purchased Life Annuties, now I more understand these PLAs, I would certainly consider PLAs.

Cheers Roger. 

That's really helpful, thank you Roger. I haven't heard of PLA's before. I will need to find out about them.

It means using your own cash ( or the tax free cash from the pension pot) rather than using the 75% of the pension pot, which is the usual way.
They are more of a niche product.