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Ethical pension annuities
Last Post 14/07/2014 17:19:53 by Rob Harrison. 2 Replies.
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PGH
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Posts:1


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16/06/2014 19:39:08
    Although Ethical Consumer provides information to help build a pension fund in an ethical way, the web site (and other sources) do not seem to help people of my age much; I’m nearly 65 and needing to convert my pension funds into an annuity. When you purchase an annuity you lose control and ownership of the money in return for an agreement to supply pension payments; your pension fund essentially goes into the annuity company’s general pot - but there still remains the question of how ethically it uses its general pot. These companies are typically big insurance companies, who presumably make money out of their money.

    One could opt for a drawdown instead on an annuity, and thus control how the fund is invested - but these seem dicier than annuities and require constant monitoring; I really don’t want to find myself in that situation in 20 years! The only reference I have found so far to “ethical annuity” is not really an annuity at all but a special type of drawdown:
    http://www.rightannuity.co.uk/are-y...al-annuity

    At the crudest level, I suppose one could look at the general behaviour of annuity providers in terms of employment, investments, environment, politics etc and possibly decide to eliminate some of them from those you want your advisor to consider. Surely I’m not the first person on the planet to have thought about this? I’m fishing for information.
    heatheradmin
    Senior Member
    Senior Member
    Posts:173


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    09/07/2014 16:25:56
    Hello PGH,

    It's an area that is not my speciality unfortunately, however I have passed your question onto one of our members who might be able to shed a bit more light on the subject.

    Kind regards,

    Heather
    Rob Harrison
    ECRA STAFF
    Senior Member
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    Posts:36


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    14/07/2014 17:19:53
    Hi PGH,

    This question came up a few years ago in an Print version of ethical consumer. We received a reply from someone in the industry who assured us that moneys buying an annuity would never be put into anything as risky as shares/bonds but in gilts/non-corporate fixed return stuff. Which could offer some reassurance to people concerned about an annuity purchase? My guess is that this has not changed, but we have not specifically researched this answer anew. Choosing one on general behaviour makes sense too.

    Rob

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