Immediate Annuity

G

gd2000

Registered User
Messages
115
My father will be taking early retirment soon and he is due to get a lump-sum from his employer.

He originally hoped to put into his AVC to allow him to purchase an annuity, but due to the timing of the payment, he will not be able to do this.

Does anyone know which life companies in Ireland provide this product (I've recently heard that Irish Life have just pulled out of this market)?

On a general point, he feels he is likely to live longer than average (based on his parents life-span and his lifestyle and recent health checks), so I'd be interested to hear any views on annuity vs alternatives (purely from a personal perspective - I'm not asking for financial advice, and no advice given will be taken as financial advice unless explicitly annotated as such).

Many thanks...
 
Your post is a little confusing.

An Immediate Annuity is where someone is buying a 'pension' with money that is not coming from a pension fund.

A Compulsory Purchase Annuity is where the money is coming from a pension fund.
 
Apologies for the lack of clarity!

My father will be getting a lump sum/golden handshake, which he was hoping to convert into an annuity (by putting it into his AVC). He will not be able to do this, due to the timing of the payment. He still hopes to be able to purchase an annuity though (hence the question about an immediate annuity). Therefore, he will not be buying an annuity with money from a pension fund - but from other sources.

I was trying to give some background to the story, but didn't do a great job!

Cheers...
 
I think that Friends First may be the only company that are still doing Immediate/Purchase Life Annuities.

You may be able to get an advisor that would set it up on a reduced commission or fee basis or which would enhance the annuity rate. The standard commission rate is 2% of the purchase price.
 
Cheers F. Kruger...

Unfortunately I called FF and they told me they've stopped selling them! Irish Life said the same...
 
There is a strong possibility that the person that you spoke to did not have a clue what you were talking about and that it was easier to say 'no' than go and check it out.

Unless, of course, the amount your father has is below some 'minimum' purchase price that they may have.
 
Okay... I'll ask again...

I don't reckon the amount is too low - it's substantial enough...
 
It would make more sense for your father to ask the employer to pay the contribution directly to his pension fund rather than to him...this would be very tax efficient for both and save you all this messing around looking for a 'non-pension' annuity.
 
CapitalCCC,

Unfortunatley the scheme actuary won't allow this... He is in a DB scheme which (unsurprisingly) is not 100% solvent. As a couple of members are taking early retirement (in lieu of redundancy), such contributions would adversely affect the solvency of the scheme. Essentially the scheme actuary will not allow it!
 
The company would not be willing to set-up a top-up arrangement for him on a DC basis?

Probably not but could be worth posing the question...if not he could put it in as AVC (if over 60 it is possible that he could put in 40% of sal last year and 40% of sal this year as AVC).
 
Unfortunately the company are extremely inflexible. He is actually being made redundant following a take-over, but as he's closer to retirement (and with >35 years service), they're offering early retirement. Now that a deal was struck with the union, the company refuse to talk to anyone about any options...

Also - it is more beneficial for him tax-wise to keep this money away from a pension contribution, as he won't get any tax relief on it...
 
So he should be entitled to a redundancy tax-free element?

In fact - it may be worthwhile sacrificing his right to take TFC from the pension scheme and taking it all in the form of redundancy Tax-Free-Cash (TFC) instead...under the SCSB calculation of redundancy tax-free-cash?
 
You could look across the water to the UK for an annuity provider, they would have a more mature annuity product offering.

Alternatively you could look at the income generating products offered by life companies, the benefit of these would be fact that any income would only be taxed at the 23% rate regardless of the amount of income received.

Income from an annuity coupled with any pension income could potentially force your father in to the 41% income tax bracket.

Deposit interest is only taxed at 20%, therefore this route could also be more attractive than buying an annuity.

The capital sum is lost when purchasing an annuity, therefore looking for a nmore flexible investment offering might be beneficial in more than one way.
 
Murp,

Much obliged... I'm going to talk to a financial advisor soon (would appreciate any recommendations) to look at income generating products, as there doesn't seem to be an alternative!

I don't think the UK would be appropriate, as currency fluctuations would alter his income (even payment might be awkward as it's international transfer of money!)...
 
You must log in or register to reply here.
Back
Top