Annuity & Income Drawdown

silentotter

I am looking into sorting out a pension arrangements for when I retire (hopefully at 55, I'm 47 now). I have some deferred final salary pension now which i guess will now pay out at the age of 66! I would expect these to pay out more then £80 each per month.

I also have a stakeholder with around £4500 which is timed to pay out at 55 but also will not pay more then £80 per month. As none of these pensions offer good retirement returns for the amount put into them I am looking elsewhere.

I should add that I am now working as a contractor which does not offer pension benefits. Can anyone explain to me what annuities and pension draw downs are and which is the better please? I am looking for something that I can put money into at my own volition, say one lump sum per year.

Silentotter

dunstonh

stakeholder with around £4500 which is timed to pay out at 55 but also will not pay more then £80 per month.

Not a chance that £4500 will pay out £80pm.

I have some deferred final salary pension now which i guess will now pay out at the age of 66! I would expect these to pay out more then £80 each per month.

Rather than assume, why not check?

As none of these pensions offer good retirement returns for the amount put into them I am looking elsewhere.

pensions dont make or lose money. Where you invest does that. What makes you think your pension isnt offering a good return?

Can anyone explain to me what annuities and pension draw downs are and which is the better please?

income drawdown is not an appropriate option for you with just £4500 available. Annuity is the product that provides the income in retirement. Your pension fund is used to buy the annuity.

I am looking for something that I can put money into at my own volition, say one lump sum per year.

like a stakeholder pension?

Is retirement at 55 realistic given that you wont get your state pension until 66, you will not get full state pensions, your defined benefit scheme you believe is also 66 and you have a stakeholder pension with just £4500 in it which is more likely to provide around £11pm at 55.

jem16

Would it not have been sensible to keep to the thread you had already started and covered a lot of what you have asked again on this thread?

http://forums.moneysavingexpert.com/showthread.html?t=2026465

silentotter

NO IT WOULDN'T!!!! and there is no need to be so objectionable jem16

jem16

silentotter wrote: »

NO IT WOULDN'T!!!!

I'm not the one doing the shouting.


One thread on the same subject helps people give you better answers as all the relevant information is there. Once it starts splitting up then you get a lot of repetition and no great extra help.

I'm only trying to help you get answers that are more relevant but if you don't want that help then I'll leave you to it.

bendix

jem16 wrote: »

I'm not the one doing the shouting.


One thread on the same subject helps people give you better answers as all the relevant information is there. Once it starts splitting up then you get a lot of repetition and no great extra help.

I'm only trying to help you get answers that are more relevant but if you don't want that help then I'll leave you to it.

Your posting history (large lump sums acquired through a lost relative and a house sale totally close to £800,000) seems to suggest you are either a Walter Mitty character or completely starved for attention.

jem16

bendix wrote: »

Your posting history (large lump sums acquired through a lost relative and a house sale totally close to £800,000) seems to suggest you are either a Walter Mitty character or completely starved for attention.

I have no idea whose posting history you were looking at but it's not mine. Last house I sold was 23 years ago for the grand sum of £32k.

Perhaps you'd like to fill me in?

EDIT - having looked through silentotter's posting history it seems you are referring to her posting history as Cook_County referred to on silentotter's other thread.
http://forums.moneysavingexpert.com/showthread.html?t=2026465

Why did you quote me then? I was beginning to think I'd lost it there.

dunstonh

Jem just thought she had £800,000 coming her way

jem16

dunstonh wrote: »

Jem just thought she had £800,000 coming her way

I wish!

Actually I was getting a little worried that it really had happened and I'd forgotten all about it.

jamesd

To obtain a £15,500 income you'll need about £260,000 in investments when you retire, assuming 6% income is achievable. You can do it on a little less if you use the pension commencement lump sum to provide capital that you use up over the years between 55 and state pension age. If you don't already have that much capital you can use a tool like the Hargreaves Lansdown pension calculator to work out how much you'll need to invest each year to get there.

Assuming that you were born on 1 January 1962 and want to retire at 55 you could contribute 100% of a 15,500 income and buy an inflation-linked annuity that provides an income of £5,000 a year from a pension fund of £140,000. The earliest you could retire on that income, using only 100% of your income for pension contributions, would be age 65. Assuming you get the state pension that I'll assume pays £5,500 a year at that age you'd need only £10,000 from the pension and could achieve that with 60.5% of your after tax income going to pension contributions, some £782 a month.

Which means that your target income and timescale is not achievable from pension contributions and you'd need to already have other assets to be able to achieve it.

bendix

jem16 wrote: »

I have no idea whose posting history you were looking at but it's not mine. Last house I sold was 23 years ago for the grand sum of £32k.

Perhaps you'd like to fill me in?

EDIT - having looked through silentotter's posting history it seems you are referring to her posting history as Cook_County referred to on silentotter's other thread.
http://forums.moneysavingexpert.com/showthread.html?t=2026465

Why did you quote me then? I was beginning to think I'd lost it there.

Sorry . my mistake.

It was meant for the OP