HL verses Moneyhelper annuity quotes/checker question/view.

RogerPensionGuy

I have been playing for hours on HL (Hargreaves Landsdown) & Moneyhelper.co.uk trying to find a sweet spot between all the various input settings and indexs on annuities.

I'm pretty fixed it will be a life policy and won't be a level annuity. 

I'm 90% sure it will be RPI or LPI as opposed to gambling on a fixed % index, I liked the idea of 3% and even 8% for various gambling reasons, but feel a fixed % just holds too much possibilities if I guess inflation wide of how it pans out over decades. So I'm pretty sure LPI or RPI, any views comments on LPI verses RPI most welcome? 

Reference value protection or guarantee, I've 90% decided a 30 year guarantee is what I'll pick, I know it waters down the payments, but I sorta like the way it just pays out for 30 years to somebody on a constant basis and am assuming it will be subject to IHT and marginal tax of recipients as a given.

The above plan certainly allows easy gifting from surplus income as this is exactly what it is currently. 

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One pick up I noticed using HL annuity checker is the fee HL get appears low compared to a few quotes from IFAs last year, I think the IFAs were getting 1.5 or 2% fee on total amount of products, so same similar work and fees maybe 2K or 12K just looked strange, however IFAs did say they would reduce fee if I did larger annuities to at least eek a bit more value doing just one annuity. 

HL quotes showed me just 3K fees on a 600K annuity, that's only about 0.5% cost. 

I'm interest on views, advantages, disadvantages of using & going forwards between HL or Moneyhelper?

For information I don't tick any of the health or lifestyle issue boxes. 

Or maybe forgetting any fees, maybe an IFA will achieve best overall results for me?

El_Torro

I hadn't actually heard of LPI. Looking it up it seems to basically be RPI but with a cap. For what you are trying to achieve I would have thought that RPI is more suitable. You'll probably get a lower payout if you stick with RPI (uncapped) but it'll protect you more from high inflation. 

I'm too young to buy an annuity but from what I've heard you'll likely get a better deal going with an IFA than doing it yourself, even taking into account the IFA's fees. Worth exploring both I would say.

DRS1

I think getting a quote for LPI is not going to be easy - some annuity providers don't do it at all so you are just limiting the pool of potential providers (and it is not a big pool to start with)

Anyway as @ElToro says you don't want LPI if you are worried about getting inflation wrong (ie underestimating it).  You really need to go for RPI increases.

8% fixed is an interesting suggestion - not sure where that came from but it would probably beat inflation in most years but we have had one year in very recent memory where it wouldn't.  And I imagine it would cost a lot more than RPI. (a LOT more).

I don't know about HL's fees.  If 0.5% is it, then it seems good to me.  I think the annuity providers when giving quotes build in a 1% commission.  If the 0.5% replaces that then good.  If it is on top then it is more comparable to the IFAs.

RogerPensionGuy

DRS1 said:

I think getting a quote for LPI is not going to be easy - some annuity providers don't do it at all so you are just limiting the pool of potential providers (and it is not a big pool to start with)

Anyway as @ElToro says you don't want LPI if you are worried about getting inflation wrong (ie underestimating it).  You really need to go for RPI increases.

8% fixed is an interesting suggestion - not sure where that came from but it would probably beat inflation in most years but we have had one year in very recent memory where it wouldn't.  And I imagine it would cost a lot more than RPI. (a LOT more).

I don't know about HL's fees.  If 0.5% is it, then it seems good to me.  I think the annuity providers when giving quotes build in a 1% commission.  If the 0.5% replaces that then good.  If it is on top then it is more comparable to the IFAs.

Thanks for view, I'm 90% feeling it should be RPI as LPI doesn't do what I want I think.

8% was just a case of back loading an annuity, I even peaked at 10% but it comes back to balance, no surprises that using 8 or 10% made initial payments very small, but with a 30 year guarantee or possibly a value protection % used instead, it does have some balance from various angles and I feel buying annuities now is a reasonable housekeeping option. 

DRS1

You may want to check around on value protection and 30 year guarantees.  I think value protection may take you into IHT territory.  I also have a niggle that very long guarantee periods (eg more than 10 years) have an issue but I can't remember what it is.

dunstonh

One pick up I noticed using HL annuity checker is the fee HL get appears low compared to a few quotes from IFAs last year, I think the IFAs were getting 1.5 or 2% fee on total amount of products, so same similar work and fees maybe 2K or 12K just looked strange, however IFAs did say they would reduce fee if I did larger annuities to at least eek a bit more value doing just one annuity. 

HL is not fee-based. It's commission as it's non-advised.  

IFA fees are what you are agree.    There is no commission with an IFA.      For a lifetime annuity, a couple of grand for an advised case should be target.  

I'm interest on views, advantages, disadvantages of using & going forwards between HL or Moneyhelper?

Moneyhelper is not a retailer.  Plus, its quotes are not real time.   They are snapshotted.    They are not accurate enough to rely on for retail.  In a stable market, that may not matter much but where rates are changing almost daily, you would want a retail distribution that is using daily or real time quotes.

Or maybe forgetting any fees, maybe an IFA will achieve best overall results for me?

Normally, the larger the fund, the more likely the IFA will be better where the IFA tapers the fee or has a cap.   If the IFA is greedy, then its unlikely they would beat £3k commission on a clean health application.

Johnnyboy11

For reference, UK RPI has risen by 38% in the past 5 years which works out at about 6.7% per annum compounded. A fixed 8% might not be that unreasonable, unless you believe that the UK State will bring inflation under control and keep it there.

RogerPensionGuy

DRS1 said:

You may want to check around on value protection and 30 year guarantees.  I think value protection may take you into IHT territory.  I also have a niggle that very long guarantee periods (eg more than 10 years) have an issue but I can't remember what it is.

Tks for views. 

Thankfully I'm only 5 or 10% bothered about IHT, I'm 90% thinking my lifestyle and comfort etc. 

I'm under no illusion about any tax in my lifetime or any estate I leave. 

From an estate point of view, I'm planning any beneficiaries non spouce will attract IHT and income tax and probably another government take, maybe they will apply NI payments or CGT. 

The UK needs to balance the books and any tax applied to dead peoples estates must be very tempting. 

DRS1

Johnnyboy11 said:

For reference, UK RPI has risen by 38% in the past 5 years which works out at about 6.7% per annum compounded. A fixed 8% might not be that unreasonable, unless you believe that the UK State will bring inflation under control and keep it there.

That is interesting.  Earlier this year I got quotes for RPI increases and 5% pa increases.  The 5% pa increases were c 10% more expensive than RPI.

I suspect annuity providers are pricing RPI as being closer to 3% than to 6%.

RogerPensionGuy

DRS1 said:

Johnnyboy11 said:

For reference, UK RPI has risen by 38% in the past 5 years which works out at about 6.7% per annum compounded. A fixed 8% might not be that unreasonable, unless you believe that the UK State will bring inflation under control and keep it there.

That is interesting.  Earlier this year I got quotes for RPI increases and 5% pa increases.  The 5% pa increases were c 10% more expensive than RPI.

I suspect annuity providers are pricing RPI as being closer to 3% than to 6%.

My various quotes are very close output at 4% and RPI, I guess the figures I see are my age, maratial status, postcode and lifestyle health data. 

Maybe I'll put on a few stones, start smoking and up my intake of Babysham drinks I consume with my cornflakes and go to the twice a day before is see the IFAs. 

RogerPensionGuy

dunstonh said:

One pick up I noticed using HL annuity checker is the fee HL get appears low compared to a few quotes from IFAs last year, I think the IFAs were getting 1.5 or 2% fee on total amount of products, so same similar work and fees maybe 2K or 12K just looked strange, however IFAs did say they would reduce fee if I did larger annuities to at least eek a bit more value doing just one annuity. 

HL is not fee-based. It's commission as it's non-advised.  

IFA fees are what you are agree.    There is no commission with an IFA.      For a lifetime annuity, a couple of grand for an advised case should be target.  

I'm interest on views, advantages, disadvantages of using & going forwards between HL or Moneyhelper?

Moneyhelper is not a retailer.  Plus, its quotes are not real time.   They are snapshotted.    They are not accurate enough to rely on for retail.  In a stable market, that may not matter much but where rates are changing almost daily, you would want a retail distribution that is using daily or real time quotes.

Or maybe forgetting any fees, maybe an IFA will achieve best overall results for me?

Normally, the larger the fund, the more likely the IFA will be better where the IFA tapers the fee or has a cap.   If the IFA is greedy, then its unlikely they would beat £3k commission on a clean health application.

All view noted & Tks. 

Looks like I'll do my poking about on HL looking for a utopian data set in to value out and then go back to the two IFAs I saw last year. 

Apart from HL, is it worth using another quote checked before I see IFAs to go forwards to save hassle & time for IFA and me at hopefully a brief meeting?