Buying An Impaired Life Annuity Without An IFA

EdInvestor

dunstonh wrote: »

oh dear. God forbid someone earns money for doing the job they are employed to do. Much better to allow the consumer to go direct and get same or worse terms but allow the insurance company to keep the fee paid to the adviser. .

Obviously I'm talking about execution only,commission rebated, not going direct.

The major fundamental problem with annuties at the moment is that people go direct, failing to shop around.

Why is it made so very difficult for them to shop around?

averageguy11

Totally agree Ed...it should be made far simpler ...maybe people would take greater interest and responsibility.

dunstonh

Obviously I'm talking about execution only,commission rebated, not going direct.

You cannot rebate commission on pensions and pension annuities. It against HMRC rules.

Why is it made so very difficult for them to shop around?

Its not. They can select from a limited number of providers if they so wish.

EdInvestor

dunstonh wrote: »

You cannot rebate commission on pensions

Rebated into the annuity.:rolleyes:

They can select from a limited number of providers if they so wish.

But it is diffuclt to grasp how to do this.Most people don't even understand that they have to buy a completely new product (an annuity or an income drawdown plan) with their pension fund.

Little effort is made to explain things to them.Usually what they do know will relate to company or state pensions and will be irrelevant.

dunstonh

Rebated into the annuity.:rolleyes:

Thats not a rebate. That is an adjustment in terms. Although the impact on the income is very small a lot of the time. No surprise when you consider that it is costed over the average life expectancy.

But it is diffuclt to grasp how to do this.Most people don't even understand that they have to buy a completely new product (an annuity or an income drawdown plan) with their pension fund.

Little effort is made to explain things to them.Usually what they do know will relate to company or state pensions and will be irrelevant.

I drive a car but it doesnt mean I know how the engine works or what needs to be done on servicing. If you dont know it you get someone to do it. I could try it myself but I know I will make a complete mess of it.

You need to know your limits and when its right to DIY or not.

If somoene doesnt know then they have a simple choice. Find out or get someone to do it.

EdInvestor

But what I'm saying is that you can't in fact DIY with annuities on an e/o basis as you can for any other product.

lilac_lady

I have an impaired health annuity, arranged by an IFA. I wasn't aware that I qualified for one until he advised me. I don't grudge him his fee as he did a lot of work (had to because of Norwich Union's many mistakes) to ensure that I got the best deal. He came to my house and kept me up to date via phonecalls. I couldn't have had a better service.

dunstonh

But what I'm saying is that you can't in fact DIY with annuities on an e/o basis as you can for any other product.

You can. However, the issue is that the annuity rate published on the FSA tables may not be the annuity rate that the IFA (who does execution only) will be able to get. It wont be any worse but it could be better (remember that IFAs can get enhanced terms plus with some providers you can play them off against each other to get better terms still). I have said this before but if you get the data from providers on the same basis as it appears on the FSA tables (read any table for that matter) then go and get real figures from the providers will find that the order the providers come out in will be different. The top company on the FSA tables may drop to 5th.

On execution only you will not be told that the company you are buying the annuity from is not the best one. You will not be told if you quality for an enhanced or annuity or not as that would break execution only rules. I cannot remember the stat exactly but its something like 40% of pension annuities arranged on standard terms would qualify for an enhanced annuity.

So, if you rely on the FSA tables to find the figures of the "top" annuity payer, then at least 4 out 10 people are not going to get the best rate and with the order changing on standard rates you can probably add another 2 or 3.

shepasme

It would probably be best to use an IFA. I'm sure someone would you email/telephone etc to assist you. Try www.ifanational.co.uk or the FSA register.

If you do go alone, and it is possible, please refer to the FSA's website and tables. Best of luck.

whiteflag_3

averageguy11 wrote: »

Totally agree Ed...it should be made far simpler ...maybe people would take greater interest and responsibility.

Yes ....and why not make brain surgery simpler at the same time , then we can all do our own!