Annuity

DullGreyGuy

westv said:

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

Which is fine, but having dealt with bulk annuities in the past, where the annuity can be set to be spouse at time of retirement rather than death, there have been some very angry people that their ex-wife/husband will be getting their pension on their passing, especially those with a new spouse. 

Cobbler_tone

DullGreyGuy said:

westv said:

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

Which is fine, but having dealt with bulk annuities in the past, where the annuity can be set to be spouse at time of retirement rather than death, there have been some very angry people that their ex-wife/husband will be getting their pension on their passing, especially those with a new spouse. 

The person who has died probably won't be too angry. 

DullGreyGuy

Cobbler_tone said:

DullGreyGuy said:

westv said:

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

Which is fine, but having dealt with bulk annuities in the past, where the annuity can be set to be spouse at time of retirement rather than death, there have been some very angry people that their ex-wife/husband will be getting their pension on their passing, especially those with a new spouse. 

The person who has died probably won't be too angry. 

At the time of the complaint they hadn't died yet, they had called up to change/remove their spouse on cover and got told their scheme was spouse at date of retirement. Won't speculate how they felt about it on the day the matter crystallised. 

Cobbler_tone

DullGreyGuy said:

Cobbler_tone said:

DullGreyGuy said:

westv said:

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

Which is fine, but having dealt with bulk annuities in the past, where the annuity can be set to be spouse at time of retirement rather than death, there have been some very angry people that their ex-wife/husband will be getting their pension on their passing, especially those with a new spouse. 

The person who has died probably won't be too angry. 

At the time of the complaint they hadn't died yet, they had called up to change/remove their spouse on cover and got told their scheme was spouse at date of retirement. Won't speculate how they felt about it on the day the matter crystallised. 

With no way of changing it? Sounds a bit antiquated, especially how some have multiple partners. 
So if a spouse passed away you couldn't transfer it to another spouse? 

I'm not into spousal pensions (yet) but would have thought it was dictated by the beneficiary form. Worst case, I'm pretty sure they'd be a way to stop an ex-spouse getting it if you didn't want them to!

zagfles

HappyHarry said:

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.

As long as you can find a decent one who understands inflation risk and can properly explain the risk of level annuity, rather than one who provide a simple but practically useless cutover illustration based on a ridiculous assumption that inflation remains a flat x% for your entire retirement. 

zagfles

Cobbler_tone said:

DullGreyGuy said:

Cobbler_tone said:

DullGreyGuy said:

westv said:

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

Which is fine, but having dealt with bulk annuities in the past, where the annuity can be set to be spouse at time of retirement rather than death, there have been some very angry people that their ex-wife/husband will be getting their pension on their passing, especially those with a new spouse. 

The person who has died probably won't be too angry. 

At the time of the complaint they hadn't died yet, they had called up to change/remove their spouse on cover and got told their scheme was spouse at date of retirement. Won't speculate how they felt about it on the day the matter crystallised. 

With no way of changing it? Sounds a bit antiquated, especially how some have multiple partners. 
So if a spouse passed away you couldn't transfer it to another spouse? 

I'm not into spousal pensions (yet) but would have thought it was dictated by the beneficiary form. Worst case, I'm pretty sure they'd be a way to stop an ex-spouse getting it if you didn't want them to!

The annuity will have been set up based on the specific details of the spouse like age, health issues etc. 

Bostonerimus1

dbrookf said:

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

An annuity is longevity insurance so the drawbacks are:
1) if you die early
2) lack of flexibility, you spend a lump sum to buy lifetime income and there's no going back.
3) buying an index linked annuity or survivor benefits can be expensive.

Drawdown from your capital has the advantage of flexibility and the possibility of providing a higher income and leaving some money over for your heirs. Of course that doesn't come with any guarantee. So some people use a hybrid approach where they use some of the pension pot to buy and annuity and some for drawdown.

DullGreyGuy

Cobbler_tone said:

DullGreyGuy said:

Cobbler_tone said:

DullGreyGuy said:

westv said:

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

Which is fine, but having dealt with bulk annuities in the past, where the annuity can be set to be spouse at time of retirement rather than death, there have been some very angry people that their ex-wife/husband will be getting their pension on their passing, especially those with a new spouse. 

The person who has died probably won't be too angry. 

At the time of the complaint they hadn't died yet, they had called up to change/remove their spouse on cover and got told their scheme was spouse at date of retirement. Won't speculate how they felt about it on the day the matter crystallised. 

With no way of changing it? Sounds a bit antiquated, especially how some have multiple partners. 
So if a spouse passed away you couldn't transfer it to another spouse? 

I'm not into spousal pensions (yet) but would have thought it was dictated by the beneficiary form. Worst case, I'm pretty sure they'd be a way to stop an ex-spouse getting it if you didn't want them to!

The annuities could be written on a spouse at retirement or a spouse at death basis, because these were bulk annuities (purchased by a pension scheme on behalf of their (deferred) pensioners) they would follow the terms of the original pension scheme and yes some are very antiquated. 

The laws around Civil Partnership explicitly require those in a civil partnership to be treated as per a married couple but other than that the scheme could be 50 years or more old. So we collected the name/dob of the spouse at retirement (either from the scheme if they were already in payment or from the annuitant when they go into payment) and from then onwards its locked if it was on date of retirement basis. 

There are still plenty of DB pension schemes out there which will only pay to a married spouse (inc civil partners) and not to someone who's cohabiting as a "common law" spouse. A regular at our local got married after 45 years of being with his partner exactly because the police pension is limited to legal spouse. 


You can speculate as to why some of the older ideas were what they were... faithful housewife of 50 years loses everything when husband decides to enjoy his last few years of life with a 20 something person in exchange for them getting his pension. These types of rules at least meant she still got his pension. 

If you move into the world of annuity reinsurance and longevity swaps these sorts of rules are still common place or worse. PRIAC, who's a massive reinsurer of UK annuities, excludes any spouse married within 6 months of death (for a spouse at date of death) and puts a fairly significant haircut to the monies if the spouse is more than 20 years younger than the insured, affectionately known as the deathbed marriages and child bride clauses.  

Cobbler_tone

DullGreyGuy said:

Cobbler_tone said:

DullGreyGuy said:

Cobbler_tone said:

DullGreyGuy said:

westv said:

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

Which is fine, but having dealt with bulk annuities in the past, where the annuity can be set to be spouse at time of retirement rather than death, there have been some very angry people that their ex-wife/husband will be getting their pension on their passing, especially those with a new spouse. 

The person who has died probably won't be too angry. 

At the time of the complaint they hadn't died yet, they had called up to change/remove their spouse on cover and got told their scheme was spouse at date of retirement. Won't speculate how they felt about it on the day the matter crystallised. 

With no way of changing it? Sounds a bit antiquated, especially how some have multiple partners. 
So if a spouse passed away you couldn't transfer it to another spouse? 

I'm not into spousal pensions (yet) but would have thought it was dictated by the beneficiary form. Worst case, I'm pretty sure they'd be a way to stop an ex-spouse getting it if you didn't want them to!

There are still plenty of DB pension schemes out there which will only pay to a married spouse (inc civil partners) and not to someone who's cohabiting as a "common law" spouse. A regular at our local got married after 45 years of being with his partner exactly because the police pension is limited to legal spouse. 

I have this exact situation. I haven't retired yet but my DB spousal provision is only guaranteed to a spouse or civil partner. I have lived with my partner for two years and she is my beneficiary. However, as we would be at the mercy of the Trustee's we will probably get married (only) as our retirement plans will rely on one another. It's the last thing I wanted to do but the only way to ensure security. It'll be a pre-nup and a ring.

Who said I wasn't an old romantic?! 

westv

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.

Wel that's obvious and it was also obvious I was only talking about a situation where there is a spouse.