What's the worst pension annuity offer you have received?

[55palfers]

I have a few money purchase pension pots from previous employers.

Because I have told them I plan to start tapping into my funds at Christmas 2021 I am starting to get some illustrations of what I can do to fund my "retirement lifestyle".

One company has sent me an Annuity illustration. Seems I'd have to stay alive for 41 years just to break even on the capital in my pot.

Bearing in mind I'd be 107 by then, does this qualify as the most one sided deal ever?

Can anyone beat that?

[Numpty with honours]

is the annuity indexed linked

[otherman]

Annuities just aren't the way to go right now, and for this reason. Returns on investments are so low, that's all they can offer. Just take the cash and choose your own investments.

[TwigtheWonderkid]

Not only are investments low, but since 2012, the outlawing of sex discrimination in insurance means men no longer get the extra money they used to receive because they die sooner, on average. Life insurance and car insurance rates for men were effected positively, but annuities were effected negatively

[55palfers]

Numpty with honours said:

is the annuity indexed linked

It didn't mention it, so presumably not.

[Simpo Two]

otherman said:

Annuities just aren't the way to go right now, and for this reason. Returns on investments are so low, that's all they can offer. Just take the cash and choose your own investments.

That makes it sound as if a private amateur investor can do better than the institutional professionals.

A friend of mine has a pension maturing soon - cash value £500! I wonder how much went in fees and commissions along the way?

[snabzter]

Simpo Two said:

That makes it sound as if a private amateur investor can do better than the institutional professionals.

A friend of mine has a pension maturing soon - cash value £500! I wonder how much went in fees and commissions along the way?

Annuities are priced off gilts and, most likely AA or A rated, corporate bonds. Add in expenses and profit margins for annuity companies plus the cost of holding the capital to withstand 1-in-200 stress scenarios (look into solvency II delegated acts for insurance companies) and risk margins (again solvency II) and you can see more reasons why annuity rates are not great.

Amateur investors don't have to take most of that into account and can remain invested in equities hence get a higher return over the long term. However, amateur investors take on a lot more risk.

[Simpo Two]

snabzter said:

Add in expenses and profit margins for annuity companies plus the cost of holding the capital to withstand 1-in-200 stress scenarios (look into solvency II delegated acts for insurance companies) and risk margins (again solvency II) and you can see more reasons why annuity rates are not great.

A quicker way to say that is 'three-quarters of five-eighths of fk all'

[CoolHands]

Please keep you-know-who off the thread