View more on these topics

Why do advisers sell annuities?

Julian Stevens asks why anybody should want a annuity, as if no adviser has ever asked this question before.

He is a bit behind the times I fear. Why indeed should anybody give away, lose completely, sacrifice, their capital for such a product, and at the same time enrich the insurance company?

A pension is an investment product in principle, just like any other, in which the saver expects to make a profit. And they may do so, until retirement.

They then give this capital irrevocably, yes permanently, away in return for a taxed income but the fact is they will never make a profit on this deal, let alone even get their money back. So why do so many IFAs sell them to their clients when there are, as Julian points out, so many better alternatives?

And if the client tries to hang on to their capital and not give it away to the insurance company, the Government taxes it at 82 per cent. How can pensions be good advice for anybody? Unless you work for the Government, of course, and never have to buy an annuity.

Philip Martin

Recommended

Fair exchange

Clients with a six-figure or bigger sum in a self-invested personal pension can take advantage of many investments that their less wealthy counterparts may baulk at. A full Sipp gives clients access to more specialist areas such as commercial property, foreign currency, warrants, gilts, futures, options, hedge funds and even private equity. One popular investment […]

Brown replaces Crawshaw at CML

Bank of Ireland personal lending managing director Richard Brown has replaced Bradford & Bingley chief executive Steven Crawshaw as chairman of the Council of Mortgage Lenders in an acting capacity.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com