Annuity

dbrookf

Thinking of buying an annuity from my pension fund - Any real downside I should be aware of? Thank you.

flaneurs_lobster

How much do you already know? Is this introduction of any use?

https://www.ageuk.org.uk/information-advice/money-legal/pensions/annuities/

Cobbler_tone

Getting hit by a bus in the next year or so would be a bummer. Maybe not for the other half if it has a healthy spousal provision. 

That's a very broad request and depends on so many things such as...
Other income, appetite to risk, age, tax position, dependants plus many, many more.

DullGreyGuy

dbrookf said:

Thinking of buying an annuity from my pension fund - Any real downside I should be aware of? Thank you.

Ultimately it's an insurance policy, even if many aspects are inversed to how insurance normally is. 

Most the "downsides" can be reduced, at a cost, by adding other features like a guarantee period, indexation, spousal benefit etc. Inevitably the more bells and whistles you add the less money you'll be paid monthly. 

All comes down to appetites and risk... some will reduce their payments significantly by having a 50% spouse pension, 10 year guarantee etc but live to 85 and die the year after their spouse meaning none of the enhancements were used. Likewise someone else may want to max the monthly payments so dont buy any of the above and get run over by a bus a few months later and so only ever receive a couple of payments. 

westv

I have a spouse and would never consider an annuity purchase without benefits for her.

flaneurs_lobster

westv said:

I have a spouse and would never consider an annuity purchase without benefits for her.

Good for you.

Other people's circumstances are, of course, myriad and may not include a spouse.

MeteredOut

flaneurs_lobster said:

westv said:

I have a spouse and would never consider an annuity purchase without benefits for her.

Good for you.

Other people's circumstances are, of course, myriad and may not include a spouse.

Or may, but still not consider it

HappyHarry

dbrookf said:

Thinking of buying an annuity from my pension fund - Any real downside I should be aware of? Thank you.

This type of product is definitely worth discussing with an IFA.

An IFA will discuss all the options with you, the upsides and the downsides , establish what fits best for your circumstances, and will very likely be able to get you a better rate than if you went to the providers directly.

Hoenir

Have you taken advice and been run through the numerous options ? 

dbrookf

THANKS EVERYONE! MUCH APPRECIATED AND YES WE HAVE TAKEN IFA ADVICE BUT JUST WANTED YOUR INPUT! 

incus432

IFA will need paying ( my best quote was 1% of pot as fee) and get you a better quote from the insurers. However many IFAs won't help without doing a full financial review costing much more. Ask for Execution only if you know you want an annuity.  

If you cant get a IFA deal Retirement Line (a broker) are very thorough & efficient but take a bit more in commission (1.5-2%).

Look at adding a guarantee period so that if you die within that your spouse or other benefiiciaries continue to get the income.