Annuity and Part Time Work

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82096247#Comment_82096247

I think @dunstonh would tell you an IFA can be better for enhanced annuities because they may get more details about your health conditions than you would give on the insurance company forms which ask about health and lifestyle.

When I used Retirement Line I had a long conversation going through those details but I don't remember giving any information which I had not already provided on one of the insurance company forms.

But I think the other difference between an IFA and a broker is the charging structure. Brokers receive a commission which is usually a percentage of the amount spent on the annuity (perhaps capped at a figure). Because of that the annuity rate will factor in commission. Even if you go direct to an annuity provider (eg use the same company that your pension is with) the annuity rate will factor in commission. An IFA will charge you a fee (which you can agree with the IFA) and it seems will have access to commission free annuity rates. So if the fee is less than the commission you may get a bigger annuity and pay less for it. But of course you never see the commission being paid whereas you will be writing a cheque for the fee. Commissions have been banned in a lot of areas so it is interesting that they still survive in annuities.

The trick is to find the right IFA. I never bothered even trying.

mrklaw

@DRS1 so you can just buy one ‘off the shelf’? honestly while I might appreciate a bit of whole market review, there don’t seem to be that many annuity providers so its not quite like a mortgage search, and I’d only be looking at a short 8-9 year fixed annuity (probably level, probably 100% value protected) so it feels like it should be simple to buy

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82097651#Comment_82097651

The circumstances where you can go direct are where you have a pension with say Aviva. Then Aviva will give you a quote for an annuity (well a lifetime annuity - I don't know about fixed term) from Aviva. They will also tell you if that is the best annuity you can get (although some doubt exists over how the comparison is done).

So if you have a SIPP you may not be able to go direct to any annuity provider.

I think the pool of providers for fixed term annuities is even smaller than for lifetime annuities. I have a memory that Canada Life may entertain a direct approach but I couldn't swear to that. You could do an online quote to see if they were the best and then see if they would deal with you direct (or through some link in the online quote). You should get the quote because the difference between the best and worst quote can be significant and you don't want to end up with the worst just because they will take your call.

However as I said going direct doesn't mean you necessarily get the best value. The rate will assume a commission is paid even if there is no broker to pay it to.

mrklaw

ok - and is a broker less expensive than an IFA? seems like an unnecessary gate to pass through with costs associated. Just looking at a short bridge so maybe good old gilt ladder may be an option.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82098142#Comment_82098142

More or less expensive - I have no idea. I never even tried to find an IFA. But you may find one who will do it for a reasonable fee. I think @dunstonh would suggest finding a small local outfit.

Unnecessary gate with costs associated - Ah! I was trying to convey that the associated costs of using a broker were the same as you would be paying going direct and that using an IFA might get those associated costs down a bit. It is more an unavoidable gate (if you cannot actually get any annuity provider to deal with you direct).

Good old gilt ladder may be an option - am I wrong or aren't you already doing that? I think in theory you ought to do better with a gilt ladder especially for a sort fixed term arrangement. An annuity will have costs or profit margin built in whereas the gilt ladder won't (apart from dealing costs and any platform fees).

mrklaw

already doing with mine. My wife has a slightly different thing - we’re still pumping her SIPP to try and get enough to draw 16760 for 8 years, leverage her allowance. She’s starting from a low balance and in contributing from my net salary

as she probably needs the full run up to retirement then a annuity seemed logical, but we can look at a ladder for her too

barnstar2077

I haven't read all of the responses yet, but what happens if you go part time and then they make you redundant in a year or too? Do you get less payout?

PractisingIFA

As someone mentioned above, find the right IFA. As a practicing one, I can tell you that we would spend time building a cashflow model for you and comparing the income for each iteration. Our fee wouldn't be charged unless you would go ahead with our advice so it may be an idea to find someone locally with that model. For the sake of clarity, I'm absolutely not touting for business and do not want to receive enquiries, I'm busy enough!

One thing I'd perhaps consider in your scenario is a level annuity instead of inflation linked. Keep in mind that in c. 12 years time you'll be receiving the state pension in addition to the annuity and DB income, so you'll get a natural increase there. A level annuity only gets "caught up" by the inflation linked annuity after 12-15 years, depending on what other features you include. So with the RPI linked annuity, you'll have more money than you will ever know what to do with it around age 70, just at the point you'll likely think about slowing down.

Now that may be great if you are certain you'll have care needs or you want to do some heavy gifting, but bear in mind that your needs and/or future rules could change.

My best advice, find a local holistic IFA who will have an initial meeting with you free of charge.

bigbazza23

thanks for all the great information. Much appreciated Baz.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82097651#Comment_82097651

One thing that seems to happen, is that the limited number of providers seem to move up and down the ‘best buy ‘ tables. ( like with savings providers). I guess they are balancing out many factors, which change over time .