Do we go for Joint Life????

moneyguru_2

An example of a discount annuity broker:

http://www.annuityarrow.com

bigbloke45

moneyguru wrote: »

An example of a discount annuity broker:

http://www.annuityarrow.com

Well, well! May I wonder if this firm happens to be connected with you? If so, that is strictly forbidden. You know the rules!

jamesd

stagey, if they don't offer an impaired life (smokers) plan then your husband should not buy an annuity from them. It would be throwing money away for the rest of his life because those will pay more than a standard annuity.

The quotes definitely might change. Annuity rates are rising at the moment so they might give a higher quote but probably wouldn't give a lower one. It's one small part of the reasons why waiting is better if you can wait. But really this doesn't matter because he needs an impaired life annuity to get maximum income if he's buying one at all, so whatever they quote shouldn't be accepted.

Did you or he ever tell them that he was a smoker? It's not good if they are willing to accept the business if they know that - even when just selling something a firm is supposed to be declining the sale if they know it's against their customer's interest to buy the product.

Retired_I.F.A.

The price of anything is negotiable so:


for fhousands of discount annuity brokers:

www.unbiased.co.uk


Everyone of them who recommends an annuity over drawdown needs a new brain for Xmas, and the idiots who recommend escalating ones need to be shot at dawn.

jamesd

Retired I.F.A., if the customer says that they want predictability and certainty from part of their money to cover the core bills and inflation with minimal risk an escalating annuity pretty much has to be considered. Or two to reduce provider risk.

But maybe the IFA will use gilts and bonds held to maturity instead to meet the specification, if authorised to do so.

How would you do it without using an escalating annuity or annuity, given the minimal risk and inflation protection constraints and the normal authorisations of an IFA?

Retired_I.F.A.

If the customer says that they want predictability and certainty from part of their money to cover the core bills and inflation with minimal risk and escalation which we all want I tell him to claim his old age pension as that fits the bill perfectly.

Every other penny in a pension plan would be best placed into drawdown though. And I include final salary schemes in that too, but until a fair transfer value at maturity is possible unfortunately the maths and the current law does make the compulsory final salary scheme annuity inevitable for such people.

For those with money purchase plans without guaranteed annuity rates buying an annuity is the biggest financial mistake possible and an escalating one so ridiculous it's comical.

stagey_2

Hi all - this is all fascinating! and thanks again for all your comments and views - I have in fact now got an online quote from a company (one the quotes is for Prudential and commission is taken into account etc )- but what is most interesting is a drawdown option - and the predictions on a 10 yr bond at 10.25% pa into SIPP - it does of course say there are risks - but with a pot of under 100k - I'm wondering whether that is sensible - and there are annual charges of course. Needless to say have still not managed to speak to the Pru! after 6pm - tele numbers and times of opening a mystery! however am hopeful for this evening. and then might beable to think about a decision. Jamesd - he would have told Pru he was a smoker (if it mattered then) when he took out pensions in 1980?? - but it seems Pru don't give quotes for a smoker now - tho' I appreciate others do - I do tend to think -take the income now at 63 and hopefully will live long enough to get more of the benefit for longer - rather than hang on for better rates (maybe?) .

Retired_I.F.A.

Stagey, Answer this please:

Do you want to put your money that over the years you have accumulated in a pension plan that has yielded I imagine in excess of 10% p/a after charges into another plan which before charges is locked into a yield of 4.7% or so (under 5% anyway at the moment) . That once in regardless of future rates of inflation/investment yields whatever will never be any better. That once in your locked in for life. That if you chose escalating income from such you will have to live beyond your expected life expectancy before you get more out than what you would have had having chosen a level income?

stagey_2

Retired_I.F.A. wrote: »

Stagey, Answer this please:

Do you want to put your money that over the years you have accumulated in a pension plan that has yielded I imagine in excess of 10% p/a after charges into another plan which before charges is locked into a yield of 4.7% or so (under 5% anyway at the moment) . That once in regardless of future rates of inflation/investment yields whatever will never be any better. That once in your locked in for life. That if you chose escalating income from such you will have to live beyond your expected life expectancy before you get more out than what you would have had having chosen a level income?

ermm! sorry - I think what you are saying is the purchasing an annuity in the usual way is not sensible compared to draw down ?

Back to original concerns - have at last spoken to the Pru (Indian call centre!) it was a bit like pulling teeth - anyway they are GAR's - BUT - two are paid up and have been for years and so don't count now and it is only the smaller one to be concerend about. she explained that at inception the plans were guaranteed to pay out a set guaranteed sum - whatever that is -
none of the info we have tells me what that might be - tho' I do have illustrations for retirement date of June 2009 which is LESS than if we took this it now - so is the GAR actually less anyway? I have asked the question and I might get a straight answer in due course. Watch this space!:rolleyes:

jamesd

stagey, getting different answers from the Pru is just more reason to get an IFA to do the leg work for you, since the IFA will have to get correct answers from Pru before it's possible to decide whether using an annuity open market option would make sense.

Using income drawdown would normally produce a higher income than buying an annuity. There's a catch of sorts. With investments it's almost an iron rule: the greater the gain, the greater the ups and downs in the value of the investment - the volatility, sometimes called risk. Also more complexity, but since a decent IFA would do the managing for you it's not unreasonable.

In any case, none of this could be decided without knowing for certain from the Pru what the guarantees are, since those could be high enough to make the normally attractive income drawdown option less appropriate. If there was say a 10-12% guaranteed annuity rate I'm not sure that even I would want to use income drawdown instead of taking that guarantee - it's quite a high target to beat. Beating 6-8% is much easier and that's the usual annuity target to beat.

Also need to find out about the enhanced or impaired life annuity incomes available since those could also be high enough to be preferable to drawdown and/or a guarantee. Depends on the his health. Obesity, smoking, coronary artery disease and such would all increase the payout of a third party annuity.

It's quite involved to get all the details together and you can't really decide between the options until you know about the guaranteed annuity rates and what would be available due to impaired health. It's one time where being likely to die earlier is an advantage - more annuity money. So just keep working away at it and eventually you'll have all the pieces together and have enough information to decide.