Traditional With Profit Pension with Guaranteed Annuity Rates
- Thread starter GSheehy
- Start date
Brendan Burgess
Founder
- Messages
- 55,135
Hi G
Very interesting.
Most people won't know what this is about. You should explain it.
I presume that GARs are no longer available.
What rate of return does €51k represent on an investment of £IR 30 per month for 38 years?
Brendan
Very interesting.
Most people won't know what this is about. You should explain it.
I presume that GARs are no longer available.
What rate of return does €51k represent on an investment of £IR 30 per month for 38 years?
Brendan
CAGR of c. 5%?
You got a basic sum assured (value) at maturity date, from outset, based on contribution level and term. There were also pre-determined Guaranteed Annuity Rates at the contract retirement age.
Regular bonuses were added to the policy and once they were added they couldn't be taken away, if you carried the plan to term.
The investment funds 'behind' the provisions of the guarantees were generally conservative in nature (think cautiously managed/mixed asset with circa 50% bonds).
On top of the basic sum assured and regular bonuses you also could get a final bonus, depending on how the fund did over the period. This would also have to take into consideration the policyholders that were left in the fund and future liabilities/guarrantees to them. In the last 10/15 years companies moved away from adding the regular bonuses and just relied on terminal bonus.
That's my recollection of the traditional (not unitised) with profit model.
Regular bonuses were added to the policy and once they were added they couldn't be taken away, if you carried the plan to term.
The investment funds 'behind' the provisions of the guarantees were generally conservative in nature (think cautiously managed/mixed asset with circa 50% bonds).
On top of the basic sum assured and regular bonuses you also could get a final bonus, depending on how the fund did over the period. This would also have to take into consideration the policyholders that were left in the fund and future liabilities/guarrantees to them. In the last 10/15 years companies moved away from adding the regular bonuses and just relied on terminal bonus.
That's my recollection of the traditional (not unitised) with profit model.
Guaranteed Annuity Rates were a feature of some With Profits policies back in the 1980's and 1990's.
Assuming you are in reasonable health, I would be very very reluctant to pass up on this option. As you can see, the GAR is twice as good as buying an Annuity in the open market.
As you see, the payback period is about 7 years, and the average life expectancy for someone retiring at age 70 is about 16 years for a male and 19 years for a female.
So a "no brainer".
Assuming you are in reasonable health, I would be very very reluctant to pass up on this option. As you can see, the GAR is twice as good as buying an Annuity in the open market.
As you see, the payback period is about 7 years, and the average life expectancy for someone retiring at age 70 is about 16 years for a male and 19 years for a female.
So a "no brainer".
All
I got a 10% guaranteed for life annuity from a 1980s pension - maturing at age 65.
The one mentioned by the OP is much better (just have to wait until 70 to benefit)
Unfortunately the fund in mine had only grown to about €3K in total and I could not add anything to it.
I can't complain, it was an Employer's Contributions only scheme that cost me nothing (no contributions made after I was made redundant) - in fact I'm very grateful.
I got a 10% guaranteed for life annuity from a 1980s pension - maturing at age 65.
The one mentioned by the OP is much better (just have to wait until 70 to benefit)
Unfortunately the fund in mine had only grown to about €3K in total and I could not add anything to it.
I can't complain, it was an Employer's Contributions only scheme that cost me nothing (no contributions made after I was made redundant) - in fact I'm very grateful.