CliveH Posted August 26, 2013 Share Posted August 26, 2013 This an odd article:- It may appear in the MSM over the next few days as the headline is quite dramatic:- “There is a 24 per cent difference between the highest annual income available for a standard annuity on an £18,000 pension pot and the lowest, data from the Association of British Insurers reveal.” Its behind a paywall so I will post the whole thing below – BUT – they neglect to mention one important thing – and that is that if your total pension pot is less than £18,000 then “Trivial Commutation” can be used to take the whole lot as cash without the need to buy an Annuity. I find it strange that the sum of £18,000 is used in the article BUT Trivial Commutation is not mentioned at all. Under TrivCom the 25% tax free cash is taken as normal and the remaining 75% - £13,500 is taken less your marginal rate of tax which is we assume 20% is a net sum of £10,800 which with the £4,500 Tax Free Cash is £15,300. This could be a better option for some than an annuity. But the figures are such that they do underline the need to check the whole of the market if you are considering an annuity. ~~~~~~~~~~~~~~~~~~~~~~~~ “Of its 27 annuity provider members, the ABI has listed ‘sample’ rates from 18 in an attempt to offer greater transparency on the market rates available. The figures reveal that for a 65-year old with a £18,000 pension pot, the best rate available is from Reliance Mutual, which according to the figures will pay an annual rate of £1,099.92. At the other end of the scale, the Hbos group, including Scottish Widows, Clerical Medical and Halifax, will pay the lowest rate at £839.52. The ABI is currently only presenting rates from 18 of its members, with many being left out because they do not offer a relevant product for comparison or because they offer rates from other providers. Among those not covered are Fidelity, LV= and MGM Advantage. The rates for those covered in the data set are detailed below: Provider Rates Abbey Life £910.16 Aviva £1,080.36 Canada Life £1,077.24 Countrywide £925.92 Friends Life £986.88 Guardian FS £921.00 HSBC Life £975.26 Legal & General £1,069.92 NFU Mutual £890.76 Phoenix £910.00 Prudential £972.59 Reassure £1,092.36 Reliance Mutual £1,099.92 Scottish Widows/Clerical Medical/Halifax £839.52 Standard Life £944.64 Sun Life of Canada £979.24 Wesleyan Assurance Society £905.16 Aegon £1,003.56 The figures also reveal the importance of shopping around for an enhancement if the customer has a qualifying lifestyle condition, with the highest possible annuity rate more than doubling to up to around £1,800, the ABI said. The process which launches pension investors into their retirement still makes it too easy for savers to end up buying the wrong type of retirement income. More work still needs to be done to simplify the retirement process and to steer investors towards a comprehensive shopping-around solution.” ~~~~~~~~~~~~~~~~~~~~~~~~ Well, whilst I certainly agree with the last paragraph – I think not mentioning Trivial Commutation – especially when the sum of £18,000 is used – hardly fulfills the heady breathless headline about - “more work needing to be done ……….. to steer investors towards a comprehensive shopping around solution” . Link to comment Share on other sites More sharing options...
antony1969 Posted August 26, 2013 Share Posted August 26, 2013 Nice one Clive , a bit of easy reading after all the misspelt drivel on here lately , thanks . Link to comment Share on other sites More sharing options...
CliveH Posted August 26, 2013 Author Share Posted August 26, 2013 My pleasure Antony :-D Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.