Buying an annuity for cash

saneman39

Can anyone tell me if there is a company from whom I can buy an annuity for cash as I don't have a 'pension pot' that I can convert (I'm over retirement age). I would be looking to spend £100K from cash savings. An annuity would fit me perfectly. I don't need a financial adviser because I have done and understood all the research. I have approached several such, not very helpful, annuity providers who will only entertain the 'pension pot' approach. If you can help I would appreciate a heads up. Many thanks.

Bostonerimus1

saneman39 said:

Can anyone tell me if there is a company from whom I can buy an annuity for cash as I don't have a 'pension pot' that I can convert (I'm over retirement age). I would be looking to spend £100K from cash savings. An annuity would fit me perfectly. I don't need a financial adviser because I have done and understood all the research. I have approached several such, not very helpful, annuity providers who will only entertain the 'pension pot' approach. If you can help I would appreciate a heads up. Many thanks.

It's an unconventional request so why don't you just set up a ladder of saving bonds and gilts/bonds or various terms ie just create your own annuity? Or look into investing the money in a portfolio of equities and bonds and taking income on a total return basis.

saneman39

Bostonerimus1 said:

saneman39 said:

Can anyone tell me if there is a company from whom I can buy an annuity for cash as I don't have a 'pension pot' that I can convert (I'm over retirement age). I would be looking to spend £100K from cash savings. An annuity would fit me perfectly. I don't need a financial adviser because I have done and understood all the research. I have approached several such, not very helpful, annuity providers who will only entertain the 'pension pot' approach. If you can help I would appreciate a heads up. Many thanks.

It's an unconventional request so why don't you just set up a ladder of saving bonds and gilts/bonds or various terms ie just create your own annuity? Or look into investing the money in a portfolio of equities and bonds and taking income on a total return basis.

Thanks for your response, but I am set on the simplicity and certainty of an annuity. Fiddling with bond ladders and the risk associated with sequence of returns is not for me.

Dazed_and_C0nfused

Not a recommendation but this might be a starting point

https://www.canadalife.co.uk/retirement/purchased-life-annuity/

GunJack

Not a subject I know much about, but could be prudent in future....why can't you buy an annuity from non pension pot money? 

HappyHarry

saneman39 said:

Can anyone tell me if there is a company from whom I can buy an annuity for cash as I don't have a 'pension pot' that I can convert (I'm over retirement age). I would be looking to spend £100K from cash savings. An annuity would fit me perfectly. I don't need a financial adviser because I have done and understood all the research. I have approached several such, not very helpful, annuity providers who will only entertain the 'pension pot' approach. If you can help I would appreciate a heads up. Many thanks.

There are companies that do this, but not many and you are looking for a purchased life annuity rather than a pension annuity.

A purchased life annuity is taxed differently - the income is considered to be part interest and part repayment of capital and so has lower tax than a pension annuity which is fully taxable as income.

So they don’t have to have the hassle of training, compliance and the regulation which comes with sales direct to retail clients , you will find that providers of purchased life annuities will want you to use an adviser and will not sell directly to you.

There is a similar thread which answers more questions here: 
https://forums.moneysavingexpert.com/discussion/6559893/purchased-life-annuities-why-must-i-pay-fat-fees-in-advice-to-be-permitted-to-buy-such/p1

Qyburn

GunJack said:

Not a subject I know much about, but could be prudent in future....why can't you buy an annuity from non pension pot money? 

You can but because it's taxed in a different (and more complex?) way there are fewer providers offering it.

dunstonh

Can anyone tell me if there is a company from whom I can buy an annuity for cash as I don't have a 'pension pot' that I can convert (I'm over retirement age).

Yes.  But its a different type of annuity, as mentioned higher up.

An annuity would fit me perfectly. I don't need a financial adviser because I have done and understood all the research.

Purchased life annuities (PLA) are not widely available and not very many are bought.  

They are a product type that is more of an exam answer to a question on suitable options but commercially, they are often not attractive.  i.e. generically, you think they will be an ideal solution but once you get the terms, you realise that they are not that attractive.     Lifetime annuities, the type you get with pensions, have a larger cross subsidy pool that uplifts the annuity rate.    PLAs have nowhere near that uplift as the cross subsidy pool is tiny.      So, you are often only getting similar rates to gilt yields plus a bit more for giving up the capital.     When you then calculate the figure, you begin to feel that using gilts gives the better option (there are other threads on using gilts)

 I have approached several such, not very helpful, annuity providers who will only entertain the 'pension pot' approach. 

Its a different product to lifetime annuities.   Most lifetime annuity providers don't offer a purchased life annuity.   And even those that day don't have a direct to consumer distribution channel as sales volumes are not enough to justify all the regulatory requirements and costs that would go with it.

incus432

saneman39 said:

Bostonerimus1 said:

saneman39 said:

Can anyone tell me if there is a company from whom I can buy an annuity for cash as I don't have a 'pension pot' that I can convert (I'm over retirement age). I would be looking to spend £100K from cash savings. An annuity would fit me perfectly. I don't need a financial adviser because I have done and understood all the research. I have approached several such, not very helpful, annuity providers who will only entertain the 'pension pot' approach. If you can help I would appreciate a heads up. Many thanks.

It's an unconventional request so why don't you just set up a ladder of saving bonds and gilts/bonds or various terms ie just create your own annuity? Or look into investing the money in a portfolio of equities and bonds and taking income on a total return basis.

Thanks for your response, but I am set on the simplicity and certainty of an annuity. Fiddling with bond ladders and the risk associated with sequence of returns is not for me.

I understand your concern but I have just set up a gilt ladder for a 6 year period and it was MUCH simpler than I anticpated and feared.   Helped by the ease of buying in my platform (AJBell). This tool is a superb resource  https://lategenxer.streamlit.app/Gilt_Ladder

timbrass

saneman39 said:

Can anyone tell me if there is a company from whom I can buy an annuity for cash as I don't have a 'pension pot' that I can convert (I'm over retirement age). I would be looking to spend £100K from cash savings. An annuity would fit me perfectly. I don't need a financial adviser because I have done and understood all the research. I have approached several such, not very helpful, annuity providers who will only entertain the 'pension pot' approach. If you can help I would appreciate a heads up. Many thanks.

Apparently (according to Pensionwise) there are only 2 providers in the Purchased Annuity market (different from Pension Annuity!) Aviva and Canada Life.  Apparently only Aviva offer competition rates. You get a higher return on a Purchased Annuity because the tax is deemed to already have been paid - i.e most of what Aviva is doing is giving you your own (taxed) money back. 

xylophone

You've had a look here?

https://www.sharingpensions.co.uk/annuity_rates_purchased.htm