Can my ISA pot be used to buy an annuity?

Izzy_Skint_2

Hi all,

As above, I have ISA's but am very keen on the idea of an income for life (I am aware of the ISA vs Pension debate). So, can my ISA pot be used to buy an annuity upon my retirement?

Many thanks

Graham, no, sorry, I mean Izzy

dunstonh

It can do. However depending on the type of annuity being purchased, the pension would probably beat it.

Purchased life annuities are slightly more tax efficient than lifetime annuities (used by pensions) but the lifetime annuity is bought after you have had tax relief.

So, ignoring contribution limits, if you had £100k in an ISA, you would have £125 in a pension. If you didnt want a lump sum, you would still take the 25% back from the pension and use it to buy a purchased life annuity but use the pension to buy a lifetime annuity.

All that said, it isnt a transaction you would probably do as there are better options for most people. So, dont read the above as being the right thing to do. it just answers your question.