Annuity Rates, Annuities, Pensions, Divorce Free Fixed Term Quote
Home News Annuity Rates Annuities Pension Annuity Impaired Annuity Annuity Quotes Pensions Divorce Resources
 

16 April 2013 last updated
Aviva pension annuity business for expats suspended by Directors

Directors at Aviva have suspended new pension annuity business for their current plans offered to expats retiring as non-UK residents with immediate effect as lawyers investigate possible breaches of US law.

Aviva have discovered potentially insurmountable hurdles with their existing pension annuity offering available to non-UK residents that have retired to other countries around the world.

Initially the problem was identified with US citizens & residents and the Directors immediately suspended the sale of retirement annuities to these individuals citing possible breaches in US law with their current terms and conditions for these annuities.

Further notification was given shortly afterwards to extend the suspension to all countries worldwide applicable to existing clients of Aviva and those seeking to purchase open market options and transfer funds from third party providers.

 
Aviva expat pension annuity business suspended
 
  More annuity topics
  April News 2013
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2016
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates
 

Impaired annuity providers withdraw from expat market

The availability of open market option annuities to people living overseas have been reducing in recent years and in particular from providers of impaired annuities with Aviva being the latest to leave the market, although they may return to some countries.

In most cases these are individuals that are UK citizens with pension funds in the UK and retired to other countries before taking their benefits. There are a smaller number of non-UK citizens that work in the UK and have accumulated pension benefits before returning to their home countries.

An open market option allows a person to buy annuities from any provider in the market if their existing provider does not offer the highest annuity rates. Aviva have applied their suspension of annuities to both open market options and existing customers that are resident overseas.

There is a double taxation agreement between the UK and many countries around the world including the United States allowing the payment of UK annuities to non-UK residents on a gross basis, where tax will be paid locally.

Over the past year impaired annuity providers have stopped offering annuities to people living overseas. Just Retirement stopped offering impaired annuities in the summer of 2012 whereas Partnership, MGM Advantage and Prudential have not been in this market in the last five years. Canada Life offers annuities to residents living worldwide but stopped offering any open market option annuities to US citizens and residents at the end of last year due to new developments in US legislation.

Of the leading impaired annuity providers only Liverpool Victoria offers impaired annuities, a with profit annuity and fixed term annuity worldwide although some countries are excluded, including the United States.

Aviva's unisex annuity rates was leading the way by changing their proposition with the EU Gender Directive and it seems they are following the market in restricting their offering to just the UK.

It is estimated that over five million UK citizens live overseas with 150,000 leaving the country each year. The popular destinations are Australia with 1.3 million, North America with 1.2 million and Spain with 0.7 million. The United States has 0.7 million and of these 24% are retired.

Less annuity choice will cost expats

As providers pull out of the market for offering retirement annuities to people with UK pension funds living overseas, the choice and competition reduces and the income they can receive will reduce.

For people in good health with UK pension funds there are still providers offering open market option annuities to worldwide residents including US citizens and residents such as from the provider Legal & General. With Aviva's exit there are now no providers of impaired annuities with offers to US citizens and residents and only the market leader Liverpool Victoria offering most countries.

As a result anyone with a medical condition living in the US will have to accept a standard annuity or consider transferring to a qualifying regulated overseas pension (QROPS) although this route may have significant tax implications, rather than buying a UK based annuity. If they accept a standard annuity they will realise a loss of income that will apply for their lifetime.

For example, a US resident aged 67 selecting a 100% joint life, level impaired annuity suffering from with high blood pressure and diabetes would receive £5,510 pa from Aviva and this would reduce to £5,020 pa on a standard life basis or a reduction of £490 pa.

Although UK impaired annuity providers claim taxation as the main reason they do not offer pension annuities to non-UK citizens, other standard annuity providers can offer their open market option annuities and double taxation agreements specifically mention annuity income from UK pension funds as an allowable plan for people living overseas.

News related stories:
Unisex annuity rates launched by Aviva but benefits to females uncertain
Related internet links:
BBC - Brits abroad world overview
Guardian - Where do UK expats live
Annuity Rates
  Age Single Joint  
  55 £4,066 £3,782  
  60 £4,544 £4,240  
  65 £5,246 £4,794  
  70 £6,045 £5,433  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
  Annuity Rates  
Annuity Quotes
  Plan your annuity and get quotes from the 12 leading providers  
 
  free annuity quote Free Annuity Quotes
  annuity quote no obligation No Obligation
  annuity quote all providers From All Providers
 
  Annuity Quote  
  Annuity Rates News:

Pension advice 1,500 allowance
Pension advice allowance New allowance of 1,500 for advice at retirement to be launched from April
Flexi-access drawdown with 23% gain
Drawdown gain from rise in equity markets Equity markets rise with drawdown funds higher by up to 23% over the year
Liverpool Victoria exits annuity market
Liverpool Victoria exits impaired annuity market Providers are leaving the impaired annuity market due to falling rates and sales
Who will use flexi-access drawdown
Flexi-access drawdown HMRC estimates that 130,000 people will use the new pension plans next year

  Follow Us:
You can follow the latest annuity updates on Twitter or as a fan on Facebook and Google+
  Facebook Page Twitter Page Twitter Page
Sharingpensions.co.uk   This website is for marketing purposes only and does not provide specific financial or legal advice. Website security issued by GeoTrust and Equifax. Copyright©2001-17 Sharingpensions.co.uk. All Rights Reserved