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Annuity payment timings
For some reason I’m not getting the ramifications of this so if anyone has any thoughts, I’d be grateful.
What are the implications, issues, upside or downsides when it comes to taking a monthly annuity in advance against in arrears.
Is it simply a matter of a slightly ( very slight ) difference in income or is there something I’m missing ?
Comments
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As you say the only difference is a slight (~0.6 - 0.8%) reduction if you take the annuity in advance.
Although, of course, the annuity may be very large and you may live for a very long time so the numbers could be significant.
Very little reason, other than being utterly bereft of funds, for not taking the payment in arrears.
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It may be an issue when you die if you are being paid in advance. Your family/heirs may not notify the pension company very quickly and the money might need to be paid back. If money is tight then this may be difficult. If the money is paid in arrears and the family/heirs notify a couple of weeks after the death the impact is less likely to be an issue.
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It's not really a consideration, since any overpayment which needed to be repaid would be a debt on the estate - and not a priority debt, so the annuity provider would simply need to be told payment could take a while.
Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!0 -
Having worked in pension admin I've seen family/heirs getting very distressed at being asked to pay back money. Yes it's from the estate it can have a big impact where, for instance, there is a widow who has been dependent on her husband's pension and may not understand that she's not entitled to that last one or two payments and has already spent the money.
I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe, Old Style Money Saving and Pensions boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
Click on this link for a Statement of Accounts that can be posted on the DebtFree Wannabe board: https://lemonfool.co.uk/financecalculators/soa.php
Check your state pension on: Check your State Pension forecast - GOV.UK
"Never retract, never explain, never apologise; get things done and let them howl.” Nellie McClung
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It's always disappointing when people are given incorrect information. If the estate can't pay all its debts, then giving a debt preference simply because a pension provider has 'demanded' repayment is going to put things in even more of a pickle.
Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!1
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