Should I take my Annuity

lewisshan

I have just received an annuity quote for my personal pension. I do not need to draw this yet as I am still working. Should I wait until the current financial climate has improved or should I take the offer.

dunstonh

If you dont need it you dont take it is the general consensus.

You will pay more in tax, it will be based on a younger age and therefore lower than when you older. Annuity rates have come down because of lower interest rates. If you expect them to have gone up again by the time you retire you would gain on that front (although the opposite if you think the other way).

Should I wait until the current financial climate

What you are linking to the current financial climate? Annuity rates, stockmarket returns, fixed interest returns, cash returns, property returns, your personal circumstances etc?

EdInvestor

Is this pension invested in a With profits fund? If so you need to check

a)whether it has any guarantees attached, which would be invalidated if you didn;t take it on the NR date. The company will not normally warn you about this.

and

b)whether it has any Market Value Reduction attached which would not apply on the NR Date but would apply at any other time. If it does you should defer for one year only (and then repeat the process annually).Otherwise they may unilaterally make your new NRD at some age like 75, so you are forced to pay the penalty.

Life companies can be quite shark-like at times:(

jamesd

If you do decide to take it, do be sure to speak with an IFA first. It's unlikely that the company you have the pension with will offer you the highest annuity payments. You won't need to pay the IFA directly for the service of finding the best deal for you. It'll be paid for by the annuity company (which keeps the money itself if you don't use an IFA for this).