Annuities - where do you think rates are going?

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82133822#Comment_82133822

Appreciate fixed term annuity triggers mpaa but i wouldn't trigger this until 1st payment, so Dec 27?

If that is a question then I would check the answer with your pension provider or the broker/IFA selling the FTA. I don't know the answer but I would have imagined the trigger point is when you spend the money in the pension buying the FTA not when the first payment is made under the FTA.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82132788#Comment_82132788

Plus, the UK Government is showing no signs of getting spending under control

I know we should not get too political, but it seems the markets are concerned about many countries struggling to get spending under control- not just the U.K.

kempiejon

I know I don't know but my money is on annuity rates going up. Ask agin in a few years when I might buy one.

eastcorkram

https://forums.moneysavingexpert.com/discussion/comment/82135356#Comment_82135356

Annuity rates might be going up, but the amount in my sipp, which I would use to buy the annuity, is going down 😀

RogerPensionGuy

https://forums.moneysavingexpert.com/discussion/comment/82135367#Comment_82135367

This post is close to my previous pathway.

My SIPP values rolled over many years, I was just over 60 years old and annuity rates increased to historic highs so I tried timming the market and got an annuity Jusr a few months back.

kempiejon

https://forums.moneysavingexpert.com/discussion/comment/82135367#Comment_82135367

Yeah, the ratio of SIPP value to annuity rate is a good decider. For now my asset allocation give me confidence keep adding my SIPP. I expect to gilt ladder for a base income level though might later annuitise but I'm hunting growth for a bit longer. Respective ages today presumably a factor at an individual level.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82132940#Comment_82132940

So in practice you get a quote based on todays rates, then in takes two months to set up ?

If annuity rates go up after say a month, can you back out and reapply?

Just interested in the mechanics.

ali_bear

Yes pretty much. It does depend on the broker guaranteeing the rate from whichever quote you choose to proceed with. If you talk to the broker they should honour any improved quote up to the point where it is out of their hands. Unless the new quote is from another broker or provider, then who knows? Maybe they would cut you a deal.

Actually I think you can back out even after the deal is done - BUT you cannot return any TFLS once it is paid out.

In my experience it takes a number of weeks for the provider to wake up and take the money from your uncrystallised pension fund. Then the TFLS will arrive in your bank account as if by magic (meaning with no notice). Then some more weeks later the annuity goes into payment (you would get your first taxable payment, assuming paid in advance as opposed to arrears).

You may get letters relating to the above some weeks later still, if your local branch of the Royal Snail are still bothering.

You may have to explain to the broker several times what your intention is, unless you are converting an entire fund with a 25% TFLS taken (the default simple case). For this reason if you are converting only part of a larger pot it may make things easier if you do a transfer to a fresh SIPP of the intended money (including TFLS) and why not invest that in eg gilts for the duration of the transaction.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82136301#Comment_82136301

Thanks for that. I also wonder how quickly annuity rates respond to increasing gilt yields, such as we have seen in the last few days ?

ali_bear

In theory at least the handful of annuity providers are in competition for your capital, although I'm sure other business and financial considerations come into play for them. Nothing to stop them speculating on gilt yields rising in the near future and offering better rates to compete for your money.