Purchase of an Annuity logistics
Nathan
Member
Hi Hive,
I just wanted to check the logistics of an annuity purchase. We have a client with a pension worth £222k and we want to buy an annuity to meet the clients personal allowance i.e. £12,570 which will cost £161,400. We plan to take the attributable tax-free cash taking that up to £215,200.
My question is, how do the logistics of this work?
Does the annuity provider send the request to the pension provider for the relevant sum, the pension providers send them the money, pays out the tax-free cash and the remainder is left within the pension?
Does it require the pension provider to allow partial transfers?
any help would be appreciated.
Nathan
Comments
Hi,
You'd get quotes from any suitable Annuity providers on the basis required.
(We do it with the Retirement Health Form, so we can get any health details etc for the client https://www.retirementhealthform.co.uk/adviser). It also has the available annuity providers details, but we do quotes online rather than emailing them,
If the providers give you quotes they will then usually either provide a partially completed application form based on the details provided with the quote, or you can use a blank Annuity application form from the provider online and fill it in.
But use the annuity quote number provided when completing the form, as annuity rates/quotes are usually only guaranteed for short period. So if the transfer takes to long they may have to re-quote the annuity rate before setting it up, which could change the level of income provided.
Send the completed form into the Annuity provider, they usually request the transfer via Origo or you'll have to send them transfer discharge forms if they are needed with the Annuity form.
Once the transfer is complete the Annuity provider pays the tax free cash as specified in the quote, then sets up the annuity income based on the annuity rate in the quote and also pays any adviser fee from the remaining balance.
If you aren't transferring the full amount, then yes the pension provider would need to allow partial transfers out. On the Annuity application forms it usually says is it a full or partial transfer etc.
Sometimes you get pension providers that want to pay the tax free cash first and then transfer the remainder, but that's not to often you might want to confirm with the pension provider.
There's other ways to do it also, some people might request the adviser fee from the full transfer amount before TFC for example. But if you check that form, you can see the options available, and annuity providers can sometimes be helpful if you call the best one for you.
Although we have had nightmares with some as they have long processing timeframes, and not many have online portals for annuities, so it's quite often phone or email chasing to get an update.
Thank you so much for your reply