Annuity Secure

R

roker

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With all the news of a Defined Benefit pension problem, mine was converted to an annuity several years ago. Is this secure, and how does the provider make money to pay me each month?
 
Who is providing the annuity? Is it being paid directly out of the scheme or did they purchase an annuity with an insurance company. If the former, you can have your annuity reduced by 10%. If it is the latter, your annuity is fine.

Annuities purchase long dated bonds to pay the retirees. Low risk assets to provide a fairly secure return.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
The trustees can reduce the annuity.

If the pension scheme is insolvent, the trustees can reduce the annuity paid. The order is as follows:
  1. Pensioners receiving pensions of less than €12,000 are prioritised and get 100% of their pension.
  2. Pensioners who receive between €12,000 and €60,000 receive 90% of benefits.
  3. Pensions who receive over €60,000 receive 80% of benefits.
  4. Once the retirees have been paid, the current/ deferred members receive 50% of benefits.
  5. If there is anything left at this stage, pensioners get their annuities topped up and then current/deferred members
Previously, pensioners got their pensions secured and current/ deferred pensioners got what was left, which was usually nothing.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
I don't understand all of that, but my pension was bought By New Ireland who have been paying me Annuity for the past 8 years. I just wanted to know if it is secure
 
If your pension is with New Ireland, it is secure. The trustees went to an insurance company and gave them a big pot of money to pay you your pension. Even if the DB scheme goes bust, it'll have nothing to do with you.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
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