Ability to use Irish pension funds to purchase annuities from UK

[Dan Murray]

Happy new year to all


Is it legally possible to buy an annuity in the UK from an Irish pension fund?

If not, what is the legal reason for this?

 

[Marc]

Dan,

Annuities are medically underwritten and therefore from a practical perspective applicants need to be able to attend a PMA with a UK doctor.

It is possible for a non resident with a UK pension to apply for a UK annuity but I am not familiar with anyone ever buying an annuity from an Irish Pension.

It would be a poor strategy however, as you would introduce currency risk into your pension income.

Perhaps making retirement planning decisions is not a good time to be trying DIY investing?

 

[Dan Murray]

Annuities are medically underwritten ?

This is not true - they may be medically underwritten if you are applying for an enhanced annuity - otherwise this is completely false statement and misleading.

...applicants need to be able to attend a PMA with a UK doctor. QUOTE]

This makes no sense - if you had said a medical- fair enough

It would be a poor strategy however, as you would introduce currency risk into your pension income.

That's your opinion which I do not share - if you have any evidence to support your view, happy to discuss. From my initial research, UK annuities seem to be 25% plus less expensive.

Perhaps making retirement planning decisions is not a good time to be trying DIY investing?

Are we being a little superior here now?


Marc - my question was the legal position - I take it that you don't know the legal position?

 

[Marc]

PMA = Private Medical Attendant

According to the Asssociation of British Insurers in 2012 around 28% of all UK annuity business was underwritten including 8% of internal cases.

 

[Sarenco]

A life assurance company authorised in one EU member state is entitled to "passport" its authorisation and write business in any other EU member state.

Whether or not purchasing an annuity in the UK with an Irish pension fund is a practical or sensible option is obviously another matter.

 

[Conan]

As Dan Murray said, a individual is not required to provide any medical evidence when buying an Annuity, unless you are seeking an Impaired Life Annuity when you will need to show that your health is such that your life expectancy is reduced. If such then you can get a better rate.
PMA = Private Medical Attentant report . This is simply a form filled out by your GP as to your recent history with the GP. But the individual does not have to "attend" for such a medical. A PMA report is often asked for in Life Assurance cases, not for Annuity purchases.

 

[Dan Murray]

Exactly Conan. Thank you - I'm glad you understand and have confirmed the factual position. Enuff said on this - I don't want the thread to get side-tracked on an insubstantial point.

Sarenco - getting back to my question - firstly, thanks for your reply. If I understand you correctly, I think what you are saying is that a UK authorised company can write business in Ireland if it chooses to do so. I accept this. My specific question is related but different.......and is whether an Irish individual - with an Irish pension fund - can legally buy an annuity from an exclusively UK based insurer?

[If it is possible, I'm happy to debate the merits of getting a 25% plus head-start on the comparable euro denominated annuity. If it's not possible, then arguably little benefit in debating the pros and cons but if this debate comes to pass, it will be interesting one. I certainly don't think it's a definite no-no, like some would have you believe!!]

For what it's worth, my suspicion is that it is not possible - but I'd just like to understand the legal basis for this.

 

[Sarenco]

Sarenco - getting back to my question - firstly, thanks for your reply. If I understand you correctly, I think what you are saying is that a UK authorised company can write business in Ireland if it chooses to do so. I accept this. My specific question is related but different.......and is whether an Irish individual - with an Irish pension fund - can legally buy an annuity from an exclusively UK based insurer?.

It's really another way of saying the same thing - a UK authorised life assurance company is entitled (pursuant to the applicable EU Directive) to write business (including annuity business) on a cross-border basis in Ireland without actually establishing a branch in Ireland. As such, there is no legal or regulatory impediment to an Irish resident buying an annuity from a UK life company. Whether or not a UK life company would actually write such a policy or whether it makes sense for an Irish resident to purchase such an annuity is another matter.

 

[Dan Murray]

Wow - that's interesting. Thanks Sarenco.

I'll be brief - as I need now to respect my new year's resolutions......of going to de pub more often!

You normally have interesting views - what's your own sense of the merits of this? For simplicity, if the UK pension was the euro equivalent of the Irish one, you might say no thanks. If the UK pension was 50% higher, you'd probably say - where do I sign. From preliminary research, it seems (and I was a little surprised by the extent of the differential) that the difference is at least 25% currently between the two. How would you evaluate the bet?

 

[Sarenco]

How would you evaluate the bet?

I'm actually surprised that the differential is not more significant. Annuity rates are obviously very significantly impacted by government bond yields and the yield on a 10-year gilt is currently more than double the composite euro area 10-year government bond yield.

In any event, I don't really see any logic in taking unhedged currency risk with any annuity product. Annuities, in my opinion, should be employed to remove market risk from a base level of required retirement income.

 

[Fortune]

You would need to find a UK provider who doesn't already have an Irish operation and are willing to sell to a foreign customer. While the EU directives allow cross border selling, not all companies want this as it can be difficult for them to comply with local regulations for just one customer.