Annuity Rates

Spivo46

I have taken some of my tax free cash to live off until my state pension kicks in 15 months time.
I am thinking of supplementing that income with a 10 year fixed term annuity (using a third of my pension fund). I am doing this so i have a peace of mind with a guaranteed income for 10 years. Is it advisable to do the online search for the best annuity returns OR request the assistance of an IFA who may have access to improved rates?

michaels

The general consensus on here is that an independent broker can get you a slightly better rate than you will get quoted via the online calculators, something to do with a rebate of commission.

Personally I don't see income as being guaranteed unless it is also protected against inflation.

hotncold47

This subject has been well covered recently, search "why by annuity" in the search bar. I'm going through the process looking for a Lifetime annuity, newer posts like "do I need a IFA" could be useful as some people have experienced problems finding Independent Financial Advisers who will do the work execution only.

I'm using a Retirementline, Moneyhelper, HL, sharingpensions, moneyworld to get some idea. The "Retirement Cafe podcast No188 featuring William Burrows is quite interesting.

Thank you RPG

RogerPensionGuy

For information I think information source is item number 188, not 88, the link below maybe helpful for some. 

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https://youtu.be/cDaNjPXsEB0?si=1yD792mvs_GEoHck

RogerPensionGuy

The link below maybe helpful on this thread.

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https://www.youtube.com/watch?v=FIyj8pgSHTE

FIREDreamer

RogerPensionGuy said:

The link below maybe helpful on this thread.

***
https://www.youtube.com/watch?v=FIyj8pgSHTE

“Hwyl fawr am y tro”.

She has some good videos on her channel.

incus432

Spivo46 said:

I have taken some of my tax free cash to live off until my state pension kicks in 15 months time.
I am thinking of supplementing that income with a 10 year fixed term annuity (using a third of my pension fund). I am doing this so i have a peace of mind with a guaranteed income for 10 years. Is it advisable to do the online search for the best annuity returns OR request the assistance of an IFA who may have access to improved rates?

Used Retirement Line and they were very efficient and got a better rate than MoneyHelper quoted. Then an IFA (local) came back who was willing to do it and their quote was a bit better again (with 1% of pot as fee).  Wasnt worried about inflation over the period (8 yr) so went with flat rate but with a full term guarantee period in case of death.

michaels

incus432 said:

Spivo46 said:

I have taken some of my tax free cash to live off until my state pension kicks in 15 months time.
I am thinking of supplementing that income with a 10 year fixed term annuity (using a third of my pension fund). I am doing this so i have a peace of mind with a guaranteed income for 10 years. Is it advisable to do the online search for the best annuity returns OR request the assistance of an IFA who may have access to improved rates?

Used Retirement Line and they were very efficient and got a better rate than MoneyHelper quoted. Then an IFA (local) came back who was willing to do it and their quote was a bit better again (with 1% of pot as fee).  Wasnt worried about inflation over the period (8 yr) so went with flat rate but with a full term guarantee period in case of death.

Seems odd to me to choose a product associated with being risk averse and then taking a risk on inflation that the final year payment might vary by at least 20% in real terms depending on the inflation path over the 8 years.

hotncold47

Thats the dilemma with annuities, I'm pondering this at the moment. In my case a lifetime single flat would generate £8852 against RPI £6392 so a £2460 difference. So do I go with the Flat and use the difference in a S&S and hope it covers inflation? Which sort of defeats the purpose of using an annuity to make things simpler as I'm getting older.

Also crudely looking at break even points the flat would be about eleven years and RPI fifteen years not factoring in any inflation. With the lower amount plus SP I will be covering my base costs and still have funds remaining in a Sipp.

MK62

michaels said:

incus432 said:

Spivo46 said:

I have taken some of my tax free cash to live off until my state pension kicks in 15 months time.
I am thinking of supplementing that income with a 10 year fixed term annuity (using a third of my pension fund). I am doing this so i have a peace of mind with a guaranteed income for 10 years. Is it advisable to do the online search for the best annuity returns OR request the assistance of an IFA who may have access to improved rates?

Used Retirement Line and they were very efficient and got a better rate than MoneyHelper quoted. Then an IFA (local) came back who was willing to do it and their quote was a bit better again (with 1% of pot as fee).  Wasnt worried about inflation over the period (8 yr) so went with flat rate but with a full term guarantee period in case of death.

Seems odd to me to choose a product associated with being risk averse and then taking a risk on inflation that the final year payment might vary by at least 20% in real terms depending on the inflation path over the 8 years.

It might, but then the initial payout of a level annuity is higher.....whether that under-compensates, over-compensates or is neutral, depends on actual inflation over the term.......you could equally say that choosing an index linked annuity is taking the risk that inflation will not be lower than the market expects.

westv

michaels said:

incus432 said:

Spivo46 said:

I have taken some of my tax free cash to live off until my state pension kicks in 15 months time.
I am thinking of supplementing that income with a 10 year fixed term annuity (using a third of my pension fund). I am doing this so i have a peace of mind with a guaranteed income for 10 years. Is it advisable to do the online search for the best annuity returns OR request the assistance of an IFA who may have access to improved rates?

Used Retirement Line and they were very efficient and got a better rate than MoneyHelper quoted. Then an IFA (local) came back who was willing to do it and their quote was a bit better again (with 1% of pot as fee).  Wasnt worried about inflation over the period (8 yr) so went with flat rate but with a full term guarantee period in case of death.

Seems odd to me to choose a product associated with being risk averse and then taking a risk on inflation that the final year payment might vary by at least 20% in real terms depending on the inflation path over the 8 years.

I am sure I read on here that, when annuities were all the rage for retirement, the vast majority were bought on a level basis. Maybe that was partly due to the SP being indexed linked??

Just out of curiosity I had a look as to what I might get (lifetime annuity) with my current pot - HL website choosing 50% survivor + 15 year guarantee. I am not retiring yet so I am only looking out of interest.

Level £25,780
RPI £15,592

I can see how a level annuity it tempting. That extra money now could be useful.