RPI - linked annuity

zagfles

westv said:

Cobbler_tone said:

westv said:

zagfles said:

Cobbler_tone said:

zagfles said:

Cobbler_tone said:

zagfles said:

Cobbler_tone said:

zagfles said:

Cobbler_tone said:

Not forgetting what drives RPI, much of which won't impact as many people in retirement. Food and utility bills will but mortgage/rent costs won't for everyone. Not forgetting that many will have oodles of savings which will attract higher interest rates during high inflation. You can almost high the collective groan when interest rates get dropped on other areas of this forum!

If you are on the breadline it is clearly more important.

Stuff like food, domestic fuel, water, council tax etc tend to rise faster than general inflation. Just check how much water has risen this year. Look at how much you were paying in council tax, gas, electric, water etc 20 years ago. 

For most of the last couple of decades inflation has been higher than interest rates. 

Depends where you want to put your line in the sand. e.g. water is cheaper than it was in 2010 with inflation applied. The Office of National Statistics' (ONS) Consumer Price Index (CPI) shows that between 1988 and 2005, the cost of food generally rose below the rate of inflation. In 2006, this changed and the cost of food rose above the rate of inflation, before dropping in 2013-14. Since 2016, food prices were on the rise again but at a lower rate than inflation (food prices went up 4.3%, whereas all inflation was 5.2%). Then there was Covid.

From my experience and from the lived experience around me, things seems to pinch in certain areas but ease off in others. e.g. it is £25 cheaper to fill my car up from the peak but that no doubt goes somewhere else.

I appreciate it is a generalisation but many pensioners (the ones who don't really need the WFA) will absorb any rises better than most. You will hear them moaning about interest rates dropping more than the price of their council tax.

The illusion that inflation doesn't affect pensioners pretty much the same as everyone else is frankly delusional. There'll be minor differences but the trend is similar for everyone. There's a personal inflation calculator here, have a play and see if you can convince yourself that inflation isn't as much an issue for pensioners as everyone else. 

How is inflation affecting your household costs? - Office for National Statistics

I’m sure it impacts some. My parents are very working class with a simple life. I know for a fact my mum hasn’t spent a penny of her state pension in 25 years (she told me) and worked full time for her last 7 years and hasn’t spent any of that either. Very old school and my dad gives her housekeeping! Their income is modest but they must spend very little to run their little bungalow and shopping. They certainly don’t need the WFA. They won’t be unique.

Inflation impacts everyone, no matter how "simple" their life is. You could live on £5 a week in 1970. You'd probably starve on that by 1980. 

Ah I see. I didn’t know you were trying to state an obvious point. Fortunately wage increases, savings interest, investments, the triple lock and discontinued six pence means that £5 a week is worth a lot more. On the flip side I just converted what my parents paid for their house. It must be worth £350k and it was the equivalent of £30k in today’s money. Then there were those who could buy council houses for peanuts. Even my first house was £40k in the early 90’s and would be over £200k today. It is easy to see how renters can struggle and the past couple of generations have been lucky. It’s the cost of housing which has driven the biggest challenges.
It is interesting to look at past comparisons of pricing. I bought a brand new car (living at home) at 18, which would have been £18k today. I can’t see most kids managing that these days. I wasn’t earning a fortune and I wouldn’t have even known what uni was!

People who are working tend to get payrises which keep up with or exceed inflation. 

I would dispute that.

Are you a resident doctor? 

I checked mine over my 31 years. I think I have beaten inflation (just) with one promotion but mainly lateral moves within the same organisation.

🤣

That is it though. Often inflation or above rises can only be achieved by moving roles or companies.

Yeah like with insurance renewals etc, many employers take advantage of the inertia effect to exploit those who CBA moving jobs etc, so if they don't think someone will leave there's no incentive to give them payrises. But those who put some effort into their career can usually get above inflation pay increases. Wages over the long term tend to rise more than inflation, and there's also the factor that older people are paid more as they have more experience, so the average worker will see their pay rise by far more than inflation over their career due to average wage rises plus "promotional" pay rises or getting a better job. 

Once they retire though, they still need to put effort into making sure their income increases with inflation.  

Cobbler_tone

The private sector will often pay what is required to get the right person, depending where they are benchmarking.
For example, they recruited a peer of mine a few years back (similar job, working alongside me in a different department) on £10k a year less than me. I haven't had huge rises, just in a role for a long time. She left and her replacement was only on £5k a year less than me. It is what they had to pay to lure her from her other job. Money is definitely not everything though for the right role. The band for my role is about £25k wide, so it allows significant flexibility. It is common place for new starters to have a salary higher than the existing employees at the same level. They don't always turn out to be the best recruitment decisions!
Our turnover is extremely low though, so it can't be too bad.

Mr_Benn

Im trying to work out if its worth me having 2x Annuities, one with Fixed rate, the other linked to the RPI.  They would be around £50k each.  Im trying to work out if its worth having a relatively small Annuity that will pay about £2k,  but that would then mean Ive covered our Annual bills (including SP and a small DB ) 

If I have 2x Annuities, will I end up paying twice the amount of Admin fees compared to having 1x larger Annuity ? 

Thanks. 

Secret2ndAccount

I saw someone on here who checked a 200k quote against 2x100k and got exactly the same amount offered
50k is quite a small amount to buy an annuity. You might find it costs a bit more to buy 2, or that some companies won't quote for 50k. Also, some providers charge differently from others (percentage / fee for the work)  So you need to check.

Go on to the HL website. Put in your details, and get a quote for 100k level, then for 100k RPI, then for 50k level, then for 50k RPI.  The picture should become clear.

Don't let the tail wag the dog though. If half RPI and half level is what you want, and you are happy with the monthly payments offered, then...

dunstonh

If I have 2x Annuities, will I end up paying twice the amount of Admin fees compared to having 1x larger Annuity ? 

Potentially, depending on where you buy it from and their charging structure.

If they charge a flat x% with no cap and you don't exceed the cap on a single plan, then you should find no cost difference.  However, if a single plan hits the cap, then its probabe that two smaller value plans would not hit the cap and therefore the cost to set it up would be higher.

Mr_Benn

Thanks guys. 

Ive got my first meeting with a FA tomorrow. Bit nervous as it suddenly starts to seem real now, even tho Im probably 2 years away from retiring in reality , but excited in the same measure.  I know she is an FA , and not an IFA, but she said they do cover the 'whole of market' for Annuities. 

Mr_Benn

So my FA gave me some quotes, which have at least given me some idea of what I will get. They werent as high as I maybe hoped, as expected them to get a better deal than I have got based on Moneyhelper.  Plus their £2,400 fee on my £80k Annuity.   So Ive tried to get some exact prices from some providers, but it seems Im going to have to call to many get exact figures, as many of the ones that came out on top via Moneyhelper seem to want you to go via an Advisor ( e.g Canada Life) , or call them which is a bit frustrating  as Im sure having to go through the whole process of giving your details to get a quote, which must be a loooong call for spelling out Medicines etc .    
I guess thats what your paying the Advisor to do, but Im happy to do it myself if worth it. 

Just looking for some advice if calling the providers direct is worth the time ?    Thank you. 

DRS1

Someone up above mentioned HL - have you tried them?

Personally I didn't get anywhere trying to talk to annuity providers direct.  In 2024 I tried the two which came top for me on Moneyhelper (Standard Life and Scottish Widows) and neither would talk to me.

I ended up using RetirementLine (not a rec) and they do have a thing about we won't be beaten (which is actually a voucher if you get a better like for like quote elsewhere).

People on here will say you should get a better deal using an IFA than an annuity broker like RetirementLine.

zagfles

Going direct is unlikely to get you a better deal, the provider will just keep the commission they usually pay. It's like with any product or service usually sold through intermediaries, the provider isn't going to undercut intermediaries because then the intermediaries won't use them. Also they probably want to avoid misselling issues. 

But using a broker could get you a better deal, and probably better than an IFA. See this thread Do you need an IFA to purchase an annuity? - Page 2 — MoneySavingExpert Forum It seems £800 for a £100k annuity is a good target to aim for, so for £80k possibly a bit less. But I'd be happy with £800 commission for an £80k annuity.