All Blogs

A blog about retiring


Annuities are a hot topic at the moment. So I decided to step away from the recent industry noise and take a closer look at the market for myself. Hereâ??s what I found.

First, itâ??s crass to talk about the annuity market as a whole. Market rates vary so much from client to client that you need to use examples to make sense of it all. So Iâ??m going to call on my LifeCo marketing background to create Mr A N Example. Letâ??s meet him.

  • Heâ??s in his early 60â??s with a low-six-figure pension pot.
  • His company of 30-odd years has not long wound down leaving him with a decent enough redundancy package.
  • He doesnâ??t fancy fully retiring for a few years yet but feels in a bit of limbo at the moment.
  • His health is generally pretty good although heâ??s on medication for a couple of minor ailments.

Fair so far? Letâ??s spice it up a bit with some more character.

  • He doesnâ??t have the greatest opinion of the finance industry after seeing his first major pension pot become a victim of those Equitable Life shenanigans.
  • He has a second pension pot which is managed by a closed-life book provider.
  • Heâ??s open to the idea of seeing an adviser but, as with everything, his instinct is to crack on with it himself.  He really just doesnâ??t know what to do for the best.

Now, it would be easy to go into industry-mode and knock this one out the park in 10 seconds flat. You might already be doing it. Which is it? Seek an adviser? Find out his risk-profile & explore drawdown? Best also make sure you find out what those ailments are and explore impaired/enhanced annuities huh? Easy. Pat on the back. Fist Pump.

Except itâ??s not as simple as that. I lied to you. Heâ??s not fictitious at all. Heâ??s my Dad. And this is happening now.

My Dad and I have had a recurring conversation over the past 5 years or so. Granted, we have our priorities right and it usually happens after a few red wines and a  dissection of the latest omnishambles to befall Dunfermline Athletic, but itâ??s a recurring theme nonetheless. It usually goes like this:

DAD: â??I got my latest statement through, do you want to have a look at itâ?

STEVE: â??Aye, go on thenâ? [Translation â?? no]

DAD: â??What do you think I should do?â?

STEVE: â??I dunno Dad, itâ??s difficultâ? [Translation â?? Iâ??m utterly petrified of influencing you in any way]

DAD: â??What do you mean, itâ??s difficult?â?

STEVE: â??Well, thereâ??s options. You donâ??t just have to buy an annuity. Thereâ??s drawâ?¦ [Immediately regretting mentioning it but Iâ??ve committed to the sentence] â?¦down. And if you decide to go for an annuity, then you have to make sure you declare health stuff [I hate saying this. Heâ??s my dad. I donâ??t want to have to explain that you will get more money because a company is essentially taking a punt on you dying quicker.]â?

DAD: â??So what should I do?â?

STEVE: â??Speak to an adviser I thinkâ?

DAD: â??Youâ??ve worked in the industry for years now and you never bloody help!â?

He does have a point. Fortunately my mum usually interjects at this point and we get back to discussing the relative managerial merits of Jim Jeffries v Jimmy Calderwood.[1] That said, I have been feeling bad about this for a while now and thought that a good look into the market on his behalf was long overdue.

Problem is I only got approximately 6 minutes into my research before finding something that worried me. A lot. I began my research by hopping onto the Money Advice Service and putting in the old boyâ??s details. Now, if youâ??ve read the pinks recently you can probably guess where this is going. Yes, 2 of the foremost enhanced annuity providers (and as it happens the companies that would have shown the best rates for #NinjacatSr) arenâ??t being pulled through in the annuity tables.

You can see straight off the bat how misleading this is. Now, I hope 99% of people will cover their bases with more comprehensive research than my quick gander at the first website that came to mind but what about tthose who are genuinely misled? Well, looking at the Money Advice Service T&Câ??s reveals thisâ?¦

â??We cannot be responsible for any inaccuracies in the information. We are under no responsibility to provide you with access to any additional information or to update this website, even if inaccuracies become apparent.â?

Really? Really? I understand the need for disclaimers. However, stating that youâ??re not obliged to correct mistakes, especially within an industry where consumer confidence is fragile, doesnâ??t feel right. Surely this flies in the face of the core purpose of the site? Thereâ??s a huge amount of content on that site, most of it grand Iâ??m sure, but getting the information right for one of the most controversial parts of our industry should be a priority.

Iâ??m going to stop now. I am mindful of the fact that, at face value, the only real insight from this blog is that 1) My Dad is retiring soon and 2) the Money Advice Service annoyed me â?? but I do think thereâ??s a wider point here. Itâ??s amazing how looking at a real, close to home example can shake you out of the comfort of your day to day bubble and make you look at things a bit differently. Focusing on my dad and his experiences reminded me of why weâ??re all in this game in the first place. I canâ??t help but get the feeling that if we did a bit more of this, then the industry would be in a slightly better place.

Iâ??m going to keep digging. Until then, I reckon youâ??d best speak to an expert Dad.

[1] Calderwood brought us success but using money we didnâ??t have. Jeffries is doing a brilliant job in challenging circumstances. Oh, do keep up.

Posted in: #general   #industry   #pensions   #Uncategorized  

About Steven Nelson

One third of team data. Certified millennial despite colleague views to the contrary. Known for his above average data and excel skills. Research and insight specialist with particular expertise in platform pricing.