Annuity rates can differ if advised, providers admit

Annuity rates offered for a given pension pot will not necessarily be the same via an advised and non-advised route even if the commission equals the adviser charge, according to investigations by Money Management.

Aviva, L&G, Partnership and Standard Life said their rates would not automatically be the same, even though the charge taken out of the pot would theoretically be identical.

Providers have taken differing approaches to this, with some accepting that commission-loaded rates will differ and some taking steps to regain a level playing field for the end client.

L&G said all rates via an intermediary with an identical adviser charge would be the same, and all non-advised rates on the same commission basis would be the same, but advised and non-advised would not match up.

It said this is to eliminate the need for customers to shop around for the best L&G rates as well as seeking out the best intermediary, with its advised factory-gate rate set on the average adviser charge.

Standard Life also said its annuity rate offered would differ as an allowance for commission is built in to the annuity rate on non-advised cases, but not for advised business.

Aviva said its rates would differ slightly as the calculations were done separately to comply with the RDR, but its intention is for income to be the same.

“These differences are usually in pence but will be exaggerated for higher funds,” it said. “We are currently working to improve the calculation so that these will be identical in all circumstances.”

Partnership also said it is aiming for equal rates regardless of the fee mechanism but an exact match may not be possible in all cases.

Canada Life, Just Retirement, LV=, Prudential and Reliance Mutual said the rate would be the same regardless of whether the charge was commission or adviser charge, as long as they were of equivalent value.

Scottish Widows said its default annuity rate has no allowance for commission or adviser charging. MGM did not disclose an answer and Primetime stated it only has advised sales at present.