Which annuity provider? How to select one?

PhoneBook

I'm 75, retired, 50% of our investments are in S&S ISAs and 50% in my drawdown SIPP. Overall around 65/35 equities/fixed interest. I'm considering transferring some or maybe all of my SIPP into an annuity as a means partly of risk reduction and partly to reduce the need to constantly monitor performance & fiddling. I'm with Hargreaves Lansdown and have used their annuity calculator to get guideline figures for various annuity alternatives. They offer choices between: Just, Aviva, Standard Life, L&G, Scottish Widows and Canada Life, they vary only by a few hundred pounds per year income. Apart from the ££ incomes, how should I choose one provider over another? Too much small print in the Ts&Cs to pore over, are there any major gotchas I need to consider?

QrizB

I'd suggest that they're all functionally equivalent. They'll all pay you the annuity you've chosen, under the terms you've selected.

What might make a bigger difference is whether you buy via a broker or an IFA, since the fee structure will differ.

Mark_d

You could look up reviews about customer service but I can't imagine there's be too much to choose from with this selection of large, robust, annuity providers.

Secret2ndAccount

If you are looking for an RPI linked annuity, some will track RPI if it is negative, slightly reducing your monthly payment. Some will use 0 if RPI is less than zero. Not likely to be a big deal, but you did ask. It's generally pretty simple, I think. Haven't heard any horror stories of people not getting paid.

DRS1

Most people just choose the one that pays the most.

A few hundred a year can mount up - especially if it is an increasing annuity.

squirrelpie

A suggestion sometimes seen on here is to use an IFA to purchase an annuity, since they can get better outcomes apparently. So it might be worth asking a local IFA for an annuity quote and comparing it against what HL have come up with.

MyRealNameToo

Secret2ndAccount said:

If you are looking for an RPI linked annuity, some will track RPI if it is negative, slightly reducing your monthly payment. Some will use 0 if RPI is less than zero. Not likely to be a big deal, but you did ask. It's generally pretty simple, I think. Haven't heard any horror stories of people not getting paid.

Inflationary benefits can have a cap or a floor, for a personal purchase annuity its fairly likely to be uncapped and may or mayn't be floored at 0. 

If you look at bulk annuities they can be vastly more options, remember one scheme that was floored at 2% and capped at 6% however any escalations above 6% were "stored" and would top up future year escalations when RPI dropped below 6%

Given all these wildly different rules they need to be able to deal with and the durations of a single policy its little wonder their systems are fairly clunky with a ton of workarounds... people who design pension schemes seem only second to those people who buy reinsurance treaties. 

FIREDreamer

My final salary pensions are capped at 5% (one at RPI, one at CPI). Not sure if floored but they probably are, given they are capped.

My two annuities are uncapped and unfloored (can go down) RPI.

dont_use_vistaprint

Money helper has a tool , no idea which products it covers but the quotes I got were better than those from my own searching. 

Problem with doing your own search is your data is being saved and you’ll get lots of  cold calling 


https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/compare-annuities

SouthCoastBoy

Never heard of just, are they new?

QrizB

SouthCoastBoy said:

Never heard of just, are they new?

Formed in 2004, so not exactly new - although newer than some (eg.Standard Life, which was formed in 1825).
https://en.wikipedia.org/wiki/Just_Group_plc