Help needed with buying an annuity with my personal pension funds

[Keith5588]

Hi, I have had help from people in this forum in the past and am very grateful for that.

After spending nearly 8 years in Thailand I have arrived back in the UK 12 days ago to sell my house and sort some financial stuff including my Money Purchase Private Pensions funds.

I have 3 separate funds with different Insurance companies but they are all similar, quite old and I think with profit schemes. Adding all 3 I have a total of about £300,000. I have contact details for all 3.

My original plan was to contact a SIPP provider and move all 3 to this but now I am thinking of buying an annuity as the annuity rates are quite good and I want things to be simple in the future.

So take 25% tax free lump sum and buy an annuity with the rest.

 

My question what is the best way to go about doing this?

Do I need or would it be wise to have an Independent Financial Advisor help me?  If so would they charge me a fee?

Or could I just look on the internet to find the Insurance company offering the best annuity rate, contact them, and they would do all the processing, hopefully for free?

 

Any help much appreciated.  Thanks in advance

Keith

PS I will be 72 next month and am looking forward to spending the rest of my life relaxing in Thailand with minimum financial decisions.

 

[TedG]

Why do you want an annuity vs putting the money in the market? 

 

https://www.investopedia.com/articles/retirement/08/annuity-mutualfund.asp

[mogandave]

I do not understand your question. 

 

Are you just asking how to buy an annuity? 

 

[Liverpool Lou]

An IFA would do the work for you but will not do it free of charge.  If they do not charge you a fee, they will be remunerated with commission by the insurer that they recommend and that commission comes out of your annuity purchase funds.  All the insurers will pay the IFA commission.   If you agree to pay a fee for the work you must ask the IFA to refund any commission he is paid to you.

 

If you go directly to an insurer, there will not be an up-front fee to pay but there will be policy charges that the insurer deducts from the annuity funds.  No professional service providers, be it insurers of IFAs  work for free.

[Liverpool Lou]

8 minutes ago, mogandave said:

I do not understand your question. 

 

Are you just asking how to buy an annuity? 

 

That is obviously what he is asking...use an IFA or deal with an insurer,

[mogandave]

6 minutes ago, Liverpool Lou said:

That is obviously what he is asking...use an IFA or deal with an insurer,

In seven paragraphs.

[Liverpool Lou]

16 minutes ago, TedG said:

Why do you want an annuity vs putting the money in the market? 

As the layman that he clearly is, perhaps he wants the peace of mind of a guaranteed income every month for the rest of his life without the risk of market movements.

[TedG]

1 minute ago, Liverpool Lou said:

As the layman that he clearly is, perhaps he wants the peace of mind of a guaranteed income every month for the rest of his life without the risk of market movements.

I can see that.

[Liverpool Lou]

1 minute ago, mogandave said:

8 minutes ago, Liverpool Lou said:

That is obviously what he is asking...use an IFA or deal with an insurer,

In seven paragraphs

That's his prerogative, it's his thread.

[Lacessit]

Why wouldn't the OP either buy bank shares for the dividends, or live on the interest from funds on deposit?

 

at 6% interest, that's 780,000 baht pa. More than enough to live on. The capital is preserved.

 

Annuities reduce the risk of outliving one's savings. They also are cream for the insurance companies if one dies early.

[soi3eddie]

You need to contact an IFA. Annuities are generally not seen as a good option for many these days. Everyone's circumstances will differ which is why, in my opinion, it is best to get professionally tailored advice. Once in an annuity the money is gone, there are different types of annuity that might help a spouse on your demise. Again, an IFA is the key here.

  

[Patong2021]

31 minutes ago, TedG said:

Why do you want an annuity vs putting the money in the market? 

 

https://www.investopedia.com/articles/retirement/08/annuity-mutualfund.asp

 

Because he is 72 and wishes to have a guaranteed income. Now is not the time to gamble on the stock market.

[Patong2021]

10 minutes ago, Lacessit said:

Why wouldn't the OP either buy bank shares for the dividends, or live on the interest from funds on deposit?

 

at 6% interest, that's 780,000 baht pa. More than enough to live on. The capital is preserved.

 

Annuities reduce the risk of outliving one's savings. They also are cream for the insurance companies if one dies early.

 I don't see how they are cream for the insurers. The annuity value at death is paid to the estate. unless the owner arranded for the anuity to continue for a spouse's benefit.

[Liverpool Lou]

7 minutes ago, soi3eddie said:

Once in an annuity the money is gone

Nonsense, it's there as income for the rest of his life.

[Liverpool Lou]

7 minutes ago, Patong2021 said:

 I don't see how they are cream for the insurers. The annuity value at death is paid to the estate. unless the owner arranded for the anuity to continue for a spouse's benefit.

Annuities with no death benefit end on the death of the annuitant and so can benefit the insurer. 

Annuities with death benefits payable to beneficiaries result in lower income payments (or higher charges).

[BangkokReady]

39 minutes ago, Liverpool Lou said:

That's his prerogative, it's his thread.

 

The broken clock is right again...  🤔

[Liverpool Lou]

4 minutes ago, BangkokReady said:

44 minutes ago, Liverpool Lou said:

That's his prerogative, it's his thread.

 

The broken clock is right again...  🤔

At least my being correct twice a day (but only in your sniping mind) is an improvement on your record.

 

If you're suggesting that my posts are usually inaccurate I'd love to see some examples that support your "statistics".   

[Liverpool Lou]

58 minutes ago, Liverpool Lou said:

No professional service providers, be it insurers of IFAs  work for free.

Correction: No professional service providers, be it insurers or IFAs  work for free.

[BangkokReady]

8 minutes ago, Liverpool Lou said:

At least my being correct twice a day (but only in your sniping mind) is an improvement on your record.

 

If you're suggesting that my posts are usually inaccurate I'd love to see some examples that support your "statistics".   

 

Nope, you've gone again...  🤷‍♂️

[Keith5588]

1 hour ago, Liverpool Lou said:

An IFA would do the work for you but will not do it free of charge.  If they do not charge you a fee, they will be remunerated with commission by the insurer that they recommend and that commission comes out of your annuity purchase funds.  All the insurers will pay the IFA commission.   If you agree to pay a fee for the work you must ask the IFA to refund any commission he is paid to you.

 

If you go directly to an insurer, there will not be an up-front fee to pay but there will be policy charges that the insurer deducts from the annuity funds.  No professional service providers, be it insurers of IFAs  work for free.

Thank you for the clear advice  @Liverpool Lou 

To clarify some other committments.

I have no children, no immediate family at all in the UK.

I have transferred all my cash ISA money into stocks and shares and feel that is enough exposure to the stock market. The only person I want to protect if I die is my Thai gf / partner and I have already made sure that she will be OK.

I started a level annuity when I left work in 2009 giving me £400 per month. It's nice to have a monthly garranteed income with no action needed.

Thanks again.

 

 

 

[Yolando]

10 hours ago, Liverpool Lou said:

As the layman that he clearly is, perhaps he wants the peace of mind of a guaranteed income every month for the rest of his life without the risk of market movements.

Much better to just buy government bonds then.  Much lower risk than an annuity, and none of the fees.  Annuities are terrible investments and many are scams. 

[jas007]

10 hours ago, Lacessit said:

Why wouldn't the OP either buy bank shares for the dividends, or live on the interest from funds on deposit?

 

at 6% interest, that's 780,000 baht pa. More than enough to live on. The capital is preserved.

 

Annuities reduce the risk of outliving one's savings. They also are cream for the insurance companies if one dies early.

Unless I'm missing something, isn't that presuming a bit much? What happens if the bank becomes insolvent? No interest, no dividends, no nothing.  

 

At this juncture, is there really anything that's 100% guaranteed?  I don't think so.  

[Yolando]

10 minutes ago, jas007 said:

At this juncture, is there really anything that's 100% guaranteed?  I don't think so.  

 

True, but an annuity is not any safer than a well diversified portfolio.  It is not 100% guaranteed income like the salesman tries to tell you, and you pay very high fees for them.

[BritManToo]

11 hours ago, Keith5588 said:

Any help much appreciated.  Thanks in advance

Keith

Contact  Hargreaves-Lansdown https://www.hl.co.uk/

These are the only investment company that didn't try to cheat me, they have many options for you to to choose from.

[jas007]

10 minutes ago, Yolando said:

 

True, but an annuity is not any safer than a well diversified portfolio.  It is not 100% guaranteed income like the salesman tries to tell you, and you pay very high fees for them.

Sure. That's  the point.  Nothing is certain.  Even an S&P 500 index fund is not the safe haven it once was.  Everybody thinks that, though, which is why it's no longer necessarily true.  People hold such funds as some sort of security blanket, and yet once that's the conventional wisdom, look out!  What would happen if 90% of the Index's investors all headed for the exit at once?  

[Oliver Holzerfilled]

1 hour ago, Yolando said:

Much better to just buy government bonds then.  Much lower risk than an annuity, and none of the fees.  Annuities are terrible investments and many are scams. 

SPIAs can be a good choice for some.  They are not scams.

 

https://www.aarp.org/money/personal-finance/what-are-immediate-annuities/

[Liverpool Lou]

1 hour ago, Yolando said:

Annuities are terrible investments and many are scams.

Which insurers do you cite as examples of annuity providers operating scams on policy holders?

[Liverpool Lou]

1 hour ago, Yolando said:

11 hours ago, Liverpool Lou said:

As the layman that he clearly is, perhaps he wants the peace of mind of a guaranteed income every month for the rest of his life without the risk of market movements.

Much better to just buy government bonds then.

Do government bonds provide a guaranteed level of monthly income?

[Lacessit]

2 hours ago, jas007 said:

Unless I'm missing something, isn't that presuming a bit much? What happens if the bank becomes insolvent? No interest, no dividends, no nothing.  

 

At this juncture, is there really anything that's 100% guaranteed?  I don't think so.  

At this juncture, I would regard a bank as safer than an insurance company.

 

Reason: Climate change is playing merry hell with their risk assessments.

[Keith5588]

Just now, Oliver Holzerfilled said:

SPIAs can be a good choice for some.  They are not scams.

 

https://www.aarp.org/money/personal-finance/what-are-immediate-annuities/

Thank you @Oliver Holzerfilled A good read.  I still have not fully decided except that I need to move the money from my old pension funds. 

Annuity rates are up at the moment but I could also move all the money to a SIPP and take a regular draw down.

I have made an appointment for tomorrow morning to have a 1 hour phone chat with a UK government person from Pension Wise.