Fixed Term Annuity purchase pot holes!

Nick9967

Hi dunstonh,
Yes you have a good point, I'll review what ever I get out of CL , if I get anywhere , they are very slow, the annuity brokers will only really get down to quotes when you're within spitting distance of your target date, which I understand, the problem is when I have those 2 or more "quotes" (direct and brokers) I still wont be able to compare like for like with an IFA or similar as the IFA wont actually furnish me with a quote for the annuity unless I go the whole hog, so a bit of a catch 22 in that respect - although not ideal I think I will end up taking my safest "known" route as I'll have little choice unless I risk the IFA , pay the fees, then fingers crossed their quote is better by sufficient to win the overall value? with some of the quotes for a full review sitting at 3% upto 200k and 2% there after I'm unconvinced they could win overall?

going back to my "piece of mind" point above do you think there will be an issue using those pots I've mentioned or will the crystallised part , Account A Part 2, be an issue with the purchase, any idea?

For sure once I've been through all of this I'll post the outcome as it may well be useful to someone.

DRS1

Nick9967 said:

DRS1 said:

Most people who buy an annuity with their pension pot would buy a lifetime annuity.  Those who buy fixed term annuities do so for a purpose such as covering the period from retirement up to SPA and they don't use their whole pension pot to buy the fixed term annuity.

What will you do for money when the fixed term expires?

I should have explained , that after expiration of the fixed term annuity  i have sufficient alternative income, I've chosen this route for piece of mind and safety,  and wouldn't receive my required income for the first 20/25 years should I go lifetime - after a couple of years deliberation I settled on fixed term (of course based on annuity rates staying reasonable until the end of 26 which is when t will happen)

OK.

When I got a quote from Retirement Line for a lifetime annuity in 2024 they threw in quotes for  variety of fixed term annuities.  For the 20 year version Canada Life came top but it was very close (LV= came second and L&G third - out of three).  One interesting thing is that Canada Life and LV= had value protection as part of the quote while L&G had a 20 year guarantee period.  I am not sure if that makes a difference.

For what it is worth the 20 year fixed term quotes were about 50% higher than the lifetime quotes.

DRS1

When I took an annuity from my SW pension this year (the annuity was also with SW) their stated "commission" was 1% of the pot used for the annuity purchase (ie excluding the lump sum).

That may not help as the commission comes from the annuity provider not the pension provider

When you get a formal quote from CL that should make it clear what commission they would pay.

Oh and when I was getting quotes the window seemed to change so while one was 90 days for others it was 30 days so you may need to give them a start date which is earlier than you actually plan.

Secret2ndAccount

Nick9967 said:

Secret2ndAccount said:

When you purchase an annuity with a pension pot the typical process is that you receive the 25% tax free cash, and 3/4 of the pot is used to buy the annuity. So you might find it easier if you don't take the TFLS first, and wait to receive it as part of the purchase process of the annuity. The reason is that many providers will not deal with an annuity purchase from an already crystallised pot.  If you use the whole crystallised pot to buy an annuity it is allowed, but partial transfers of crystallised pots are complicated at best, so some providers just won't deal with crystallised pots.

exactly why asked the question , so thanks, is it the case that you believe i wont be able to use Account A part 2 (crystallised already) as part of the purchase then? there must be a way round that isn't there?

My understanding is that if the fixed term annuity consumes the entire crystallised pot then this is permitted. I don't know how easy or difficult it will be to find someone to enact the process.

Nick9967

DRS1 said:

Nick9967 said:

DRS1 said:

Most people who buy an annuity with their pension pot would buy a lifetime annuity.  Those who buy fixed term annuities do so for a purpose such as covering the period from retirement up to SPA and they don't use their whole pension pot to buy the fixed term annuity.

What will you do for money when the fixed term expires?

I should have explained , that after expiration of the fixed term annuity  i have sufficient alternative income, I've chosen this route for piece of mind and safety,  and wouldn't receive my required income for the first 20/25 years should I go lifetime - after a couple of years deliberation I settled on fixed term (of course based on annuity rates staying reasonable until the end of 26 which is when t will happen)

OK.

When I got a quote from Retirement Line for a lifetime annuity in 2024 they threw in quotes for  variety of fixed term annuities.  For the 20 year version Canada Life came top but it was very close (LV= came second and L&G third - out of three).  One interesting thing is that Canada Life and LV= had value protection as part of the quote while L&G had a 20 year guarantee period.  I am not sure if that makes a difference.

For what it is worth the 20 year fixed term quotes were about 50% higher than the lifetime quotes.

that's interesting thanks, I am interested to find out what CL will quote me and with what commission , retirement Line's documentation states that commission rates from providers (the only income they receive from this transaction)  vary between 1.5% and 3% - in theory if i compare the two it will at the very least give me a good logical guide - although now looking at some other posts and my own I'm a little concerned about using the crystallised part of my pots and whether I can or not?

DRS1

Nick9967 said:

DRS1 said:

Nick9967 said:

DRS1 said:

Most people who buy an annuity with their pension pot would buy a lifetime annuity.  Those who buy fixed term annuities do so for a purpose such as covering the period from retirement up to SPA and they don't use their whole pension pot to buy the fixed term annuity.

What will you do for money when the fixed term expires?

I should have explained , that after expiration of the fixed term annuity  i have sufficient alternative income, I've chosen this route for piece of mind and safety,  and wouldn't receive my required income for the first 20/25 years should I go lifetime - after a couple of years deliberation I settled on fixed term (of course based on annuity rates staying reasonable until the end of 26 which is when t will happen)

OK.

When I got a quote from Retirement Line for a lifetime annuity in 2024 they threw in quotes for  variety of fixed term annuities.  For the 20 year version Canada Life came top but it was very close (LV= came second and L&G third - out of three).  One interesting thing is that Canada Life and LV= had value protection as part of the quote while L&G had a 20 year guarantee period.  I am not sure if that makes a difference.

For what it is worth the 20 year fixed term quotes were about 50% higher than the lifetime quotes.

that's interesting thanks, I am interested to find out what CL will quote me and with what commission , retirement Line's documentation states that commission rates from providers (the only income they receive from this transaction)  vary between 1.5% and 3% - in theory if i compare the two it will at the very least give me a good logical guide - although now looking at some other posts and my own I'm a little concerned about using the crystallised part of my pots and whether I can or not?

I confess I do not know the answer to that.  I am very old fashioned and went straight to the annuity without doing any of the flexible stuff.

However Retirement Line should have come across this and can advise you.  From @Secret2ndAccount's post it looks like you could do it.  But you may need to watch out for the type of fixed term annuity it is - some of them have an annuity maturity value at the end of the fixed term.  I am not sure if that is only the 5 or 10 year versions but it sounds like you should avoid that for the crystallised bit.

Nick9967

Thanks DRS1, all good to know, interesting that SW was 1% - it maybe that CL come out best on basic quotes , but dependent on commissions etc , that might move SW up the ranks for me , and simplify things perhaps , 

DRS1

Nick9967 said:

Thanks DRS1, all good to know, interesting that SW was 1% - it maybe that CL come out best on basic quotes , but dependent on commissions etc , that might move SW up the ranks for me , and simplify things perhaps , 

The quotes are all after commission so you don't deduct the commission from the quote.  Just take the biggest quote and don't worry about commission.  

Also I am not sure if SW do fixed term annuities - they weren't in the three who quoted for me via Retirement Line even though they were in the list of quotes for lifetime annuities.

dunstonh

hat's interesting thanks, I am interested to find out what CL will quote me and with what commission , retirement Line's documentation states that commission rates from providers (the only income they receive from this transaction)  vary between 1.5% and 3% - in theory if i compare the two it will at the very least give me a good logical guide 

Back in the old days, the commission rates were set by the provider.  Nowadays, the distributor sets the commission amount they want.    The providers no longer set the commission (unless you buy direct from them)

Ironically, I just got two quotes for an FTA for a client I am working on and have the tab still open. This is the remuneration option the firm sees when generating a quote (there are three main quote engines, this is one of them but they all ask the same as they have to feed into the providers using API protocols)



A figure would be entered in the commission box, or, where they want the same figure every time or want to set a maximum that they can discount from they set their "usual" figure in the settings.   The service level  (Execution only, non-advised or direct offer) makes no difference to the figure but does adjust the text on quotes to reflect the distribution method.   

When I did an execution-only FTA last year, I played with the fee/commission options to achieve the same amount in monetary terms.   As it was non-advised, I could use fee or commission and the non-advised fee gave the best outcome, but the difference in GMV was very small.  A couple of pints of milk a year difference.

Nick9967

that's really useful information dunstonh, as usual, thanks for all your help, i'll keep you all posted on what i get back