Annuities - most trusted providers & can I buy without IFA?
Discussion
I've been looking at adding annuities as part of my pension portfolio, mostly as they are a diversification away from equities.
A couple of questions arise though:
i) Are there any companies that offer reasonable rates and a competent service level? The usual suspects in terms of high rates seem to do badly in Trustpilot reviews.
ii) Many providers seem to want to deal only via IFAs. I'd rather deal direct with the provider if possible (I don't feel I need any advice). Are there providers that will deal direct?
If I have to use an IFA how much should I be charged on a time rather than percentage of investment basis?
A couple of questions arise though:
i) Are there any companies that offer reasonable rates and a competent service level? The usual suspects in terms of high rates seem to do badly in Trustpilot reviews.
ii) Many providers seem to want to deal only via IFAs. I'd rather deal direct with the provider if possible (I don't feel I need any advice). Are there providers that will deal direct?
If I have to use an IFA how much should I be charged on a time rather than percentage of investment basis?
Aviva, Canada Life, Standard Life are probably the big three. Think Aviva have people you can discuss options.
Some insist on using an IFA as it is a pretty big decision as once made you are stuck with it. Thing retirement age, guaranteed period, joint life, single life etc.
What do you expect in terms of service level? Once set up there isn’t much to do other than pay a monthly amount, deduct the correct tax and issue a P60
Some insist on using an IFA as it is a pretty big decision as once made you are stuck with it. Thing retirement age, guaranteed period, joint life, single life etc.
What do you expect in terms of service level? Once set up there isn’t much to do other than pay a monthly amount, deduct the correct tax and issue a P60
I had no problems doing my own transfer from Scottish Widows to Legal & General so that I could take my 25%TFLS and then use the remaining funds to set up an annuity myself. I actually chose a 9 year fixed annuity,* but it was an option to take a full lifetime annuity if I'd wanted to.
I did not use or need an IFA to do this and it probably took me about 30 minutes or so on my laptop to set it all up, plus a couple of short phone calls. I did ask my wife's IFA to quote for the same arrangement and over the 9 years I would have been approx £3k worse off, so I figured the small amount of time I took to set it up was well worth my while.
No issues with payments, tax codes or any other admin in nearly 3 years of taking it. It always arrives promptly in my bank account each month. I won't find out about the maturity options for another 6 years or so, but no reason to expect any issues based on experience so far.
Obviously do your own research and due diligence.
* I'll move it over to a more regular drawdown when the annuity matures as I've become less risk averse than I was when I first started it.
I did not use or need an IFA to do this and it probably took me about 30 minutes or so on my laptop to set it all up, plus a couple of short phone calls. I did ask my wife's IFA to quote for the same arrangement and over the 9 years I would have been approx £3k worse off, so I figured the small amount of time I took to set it up was well worth my while.
No issues with payments, tax codes or any other admin in nearly 3 years of taking it. It always arrives promptly in my bank account each month. I won't find out about the maturity options for another 6 years or so, but no reason to expect any issues based on experience so far.
Obviously do your own research and due diligence.
* I'll move it over to a more regular drawdown when the annuity matures as I've become less risk averse than I was when I first started it.
Try https://www.moneyhelper.org.uk/en/pensions-and-ret...
Principal providers are Aviva, Standard Life, Scottish Widows, Just, L&G and Canada Life.
Remember to declare any health conditions or concerns… there are stats out there that suggest many people don’t declare health concerns that could have resulted in them receiving enhanced annuity terms, leaving money on the table.
Principal providers are Aviva, Standard Life, Scottish Widows, Just, L&G and Canada Life.
Remember to declare any health conditions or concerns… there are stats out there that suggest many people don’t declare health concerns that could have resulted in them receiving enhanced annuity terms, leaving money on the table.
I used HL, as I had a SIPP with them at the time.
Try this calculator
https://www.hl.co.uk/retirement/annuities/cost-del...
Don’t forget to complete the medical section, you may get an increased amount for something as simple as high blood pressure.
No IFA required.
I think using an annuity as part of your retirement income has a lot of benefits. There is a lot of negative comments on investment forums about them. I think it’s based on previous rates, you may die just after your first payment (you can get a guaranteed minimum payment period if interested). Also biased by recency bias of market returns.
It’s also worth noting, when using the above calculator that if you enter very large amounts for the purchase, the rate for some providers goes DOWN. Because of that I purchased from two providers.
Try this calculator
https://www.hl.co.uk/retirement/annuities/cost-del...
Don’t forget to complete the medical section, you may get an increased amount for something as simple as high blood pressure.
No IFA required.
I think using an annuity as part of your retirement income has a lot of benefits. There is a lot of negative comments on investment forums about them. I think it’s based on previous rates, you may die just after your first payment (you can get a guaranteed minimum payment period if interested). Also biased by recency bias of market returns.
It’s also worth noting, when using the above calculator that if you enter very large amounts for the purchase, the rate for some providers goes DOWN. Because of that I purchased from two providers.
Whether you take advice or not someone is getting some of your money. Bought through a company like HL they are acting as a broker so they will receive commission. Bought direct they'll just pay themselves the commission.
Advice does usually cost a bit more than the commission but not a lot more as it's the advice charge instead of the commission, rather than on top.
For most people, a mix of annuity and drawdown is a good idea. Annuity for essentials and drawdown for discretionary expenditure, broadly speaking.
A fixed term annuity is actually a drawdown product, so it will trigger the MPAA. A lifetime annuity does not.
A lot of people don't realise how cheap guarantee periods are. With the maximum 30yrs for an early sixties couple on 100% joint life it doesn't affect the rate much, but ensures a minimum payout typically around 180-190% of the purchase price.
Annuity rates are higher than portfolio natural income yields, because you're using up the capital too. Difference is that you can do it safely as the longevity risk lies with the provider and not you on a finite pot.
Advice does usually cost a bit more than the commission but not a lot more as it's the advice charge instead of the commission, rather than on top.
For most people, a mix of annuity and drawdown is a good idea. Annuity for essentials and drawdown for discretionary expenditure, broadly speaking.
A fixed term annuity is actually a drawdown product, so it will trigger the MPAA. A lifetime annuity does not.
A lot of people don't realise how cheap guarantee periods are. With the maximum 30yrs for an early sixties couple on 100% joint life it doesn't affect the rate much, but ensures a minimum payout typically around 180-190% of the purchase price.
Annuity rates are higher than portfolio natural income yields, because you're using up the capital too. Difference is that you can do it safely as the longevity risk lies with the provider and not you on a finite pot.
Gassing Station | Finance | Top of Page | What's New | My Stuff