The big R cometh

zygurat789

jamesd wrote: »

EdInvestor, I wouldn't want to suggest that you're the older of the two but you could be.

zygurat789, your choices are yours to make and those are reasonable. Taking level annuities is extremely common, I think the most common choice.

And yet there are those who won't discuss them preferring other options, fine choice is good.
TBH I'm not sure what is so great about drawdown, having read the sticky but I can see it offers different directions to an annuity and I don't think those options are suitable for a large number of people who are eligible to use them.

feesarefare

Hello zygurat789

Many advisers would not advocate drawdown on a net pension fund of less than £100k. Are you in positition where your fund is above this level otherwise I would say you most probably better to be looking at an annuity?

Also during your research have you come across "impaired life" annuities?

zygurat789

feesarefare wrote: »

Hello zygurat789

Many advisers would not advocate drawdown on a net pension fund of less than £100k. Are you in positition where your fund is above this level otherwise I would say you most probably better to be looking at an annuity?

Also during your research have you come across "impaired life" annuities?

Personally I wouldn't consider a drawdown unless it was for a short period
while (hopefully) interest rates rose a little. I do have several reasons for this opinion.
One of the practical things I had been hoping to find out when I started this thread was what sort of timings are there between taking a fund and buying an annuity. Insurance companies are very pedantic about when you can and cannot realise your pension pot, without penalties, and interest rates look as if they may be about to rise

EdInvestor

zygurat789 wrote: »

Personally I wouldn't consider a drawdown unless it was for a short period
while (hopefully) interest rates rose a little.

Just as a matter of interest, are you aware that a properly invested drawdown is safer than an annuity?

One of the practical things I had been hoping to find out when I started this thread was what sort of timings are there between taking a fund and buying an annuity. Insurance companies are very pedantic about when you can and cannot realise your pension pot, without penalties, and interest rates look as if they may be about to rise

By 'taking a fund' I assume you mean vesting/crystallising a pension pot so as to convert it into a retirement income stream. Typically,it isn't possible to convert an existing pot directly as most conventional pension contracts do not have a drawdown option attached. Issues related to NRD, guarantees on maturity etc will affect the open market annuity option as well as drawdown.

Most people need to transfer the pot into a drawdown plan elsewhere and these are typically offered by SIPP providers. A transfer can be as fast as a week or two, or as slow as years, usually depending on the behaviour of the original provider, and/or the effectiveness or your (or your advisor's) chasing.

So it's very wise to do plenbty of research in advance on drawdown, so you know how the capital and income rules are structured, what type of provider you need and what kind of charges you are willing to pay, plus how you plan to invest the money ( an important factor in choosing a provider).

Drawdown is quite complex to set up, but done properly in my experience it is trouble free to run and you can maintain control of the capital and income and leave it to your family if there is any left over when you die (which there usually is) rather than donate it to the annuity firm..

Just recently I have read a number of posts elsewhere from Equitable Life with profits annuitants, who are receiving their annual letter announcing that their annuity income will fall yet again (by average 11% IIRC).

There is absolutely nothing they can do about this.A person in drawdown does not face this plight.Drawdown offers flexibility and potentially better returns as you get older plus the opportunity to hold onto your accumulated savings rather than relinquish them to an insurance company overnight.It's hardly surprising it is growing in popularity. .

zygurat789

EdInvestor wrote: »

Just as a matter of interest, are you aware that a properly invested drawdown is safer than an annuity?

I challenge you to justify that


By 'taking a fund' I assume you mean vesting/crystallising a pension pot so as to convert it into a retirement income stream. Typically,it isn't possible to convert an existing pot directly as most conventional pension contracts do not have a drawdown option attached. Issues related to NRD, guarantees on maturity etc will affect the open market annuity option as well as drawdown.
The post actually said before buying an ANNUITY

Most people need to transfer the pot into a drawdown plan elsewhere and these are typically offered by SIPP providers. A transfer can be as fast as a week or two, or as slow as years, usually depending on the behaviour of the original provider, and/or the effectiveness or your (or your advisor's) chasing.

So it's very wise to do plenbty of research in advance on drawdown, so you know how the capital and income rules are structured, what type of provider you need and what kind of charges you are willing to pay, plus how you plan to invest the money ( an important factor in choosing a provider).

Drawdown is quite complex to set up, but done properly in my experience it is trouble free to run and you can maintain control of the capital and income and leave it to your family if there is any left over when you die (which there usually is) rather than donate it to the annuity firm..

Just recently I have read a number of posts elsewhere from Equitable Life with profits annuitants, who are receiving their annual letter announcing that their annuity income will fall yet again (by average 11% IIRC).

There is absolutely nothing they can do about this.A person in drawdown does not face this plight.Drawdown offers flexibility and potentially better returns as you get older plus the opportunity to hold onto your accumulated savings rather than relinquish them to an insurance company overnight.It's hardly surprising it is growing in popularity. .

I don't doubt you superior knowledge on drawdowns but I am, at this point, only interested in finding out about annuities. Haven't I made this abundantly clear to you? I have read your post, which you no doubt feel is full of pearls of wisdom that you have cast before me, however, it is wasted on me at this time.
When I have found out about annuities maybe we'll have a discussion about drawdowns.

TMFTP

Zygurat, either you're a troll, or you're not at all capable of "learning about annuities" from this forum.

You fluctuate between "oooh, we're old and lose our faculties..." and "ELDERS AND BETTERS!" so I'm inclined towards "troll." But hey - benefit of doubt.

I've pointed out a lot of the factors in annuities AND THEIR EFFECTS - and you don't recognise them when they're put there.

You claim to "know about drawdown" - but your responses to posts abot drawdown show you don't. At ALL.

And finally you're saying "Insurance companies are very pedantic about when you can and cannot realise your pension pot, without penalties" No - they're not. Legislation defines when you can and cannot realise your pot, and insurance companies MAY apply penalties depending on the type of fund you're invested in. Typically with-profits funds applying withdrawal charges. And typically outside the date that is specified to THEM as your retirement date. If you like, I can explain the rationale for that in terms you'd understand. But I suspect you "won't like", so I'm not going to bother.

Enjoy your retirement.

lemma1968

I am someone who knows not a lot about the pension malarky - I have had some of the benefit of Dunstonh's advise before.

But - for the love of all that is good - i'm getting a headache reading all this.

Its clearly a difficult subject. Pensions are notoriously complicated and the good people on this forum try to help as best they can to share knowledge gained through experience.

I know that the OP is frustrated that his topic limited to annuities is being sent off the rails but I also see it as an interesting debate on the + versus - of each option.

A simple "thank you" for trying to help each other even if it does not give exactly the answer required is all that is needed. Although money is not everything, if you make a rubbish and ill informed decision and you lose £1000's as a result, then you may come to see that to some people, especially in retirement, money does become everything. My parents made the mistake years ago. They struggle every day now.

I know none of this was relevant but the thread was becoming slightly narky in tone and some of us would like to learn.

zygurat789

TMFTP wrote: »

Zygurat, either you're a troll, or you're not at all capable of "learning about annuities" from this forum.
Here you are being rude again.
You fluctuate between "oooh, we're old and lose our faculties..." and "ELDERS AND BETTERS!" so I'm inclined towards "troll." But hey - benefit of doubt.
I try not to be personal but you have been nothing but
I've pointed out a lot of the factors in annuities AND THEIR EFFECTS - and you don't recognise them when they're put there.
You obviously know all about annuities working where you do, and are determined to hold on to the information and not divulge it just because I asked the question.

You claim to "know about drawdown" - but your responses to posts abot drawdown show you don't. At ALL.
I know what I have read on this sight, some of it contributed by yourself,
are you admitting to talking rubbish?


And finally you're saying "Insurance companies are very pedantic about when you can and cannot realise your pension pot, without penalties" No - they're not. Legislation defines when you can and cannot realise your pot, and insurance companies MAY apply penalties depending on the type of fund you're invested in. Typically with-profits funds applying withdrawal charges. And typically outside the date that is specified to THEM as your retirement date. If you like, I can explain the rationale for that in terms you'd understand. But I suspect you "won't like", so I'm not going to bother.
I read about one the other day in a reputable weekend paper.
The decision to "cystallize" had to be taken that day, or was it week. or there was a penaly. I would call that pedantic
Enjoy your retirement.

I am at a total loss why certain posters can't keep on topic and be civil.
i think they only do it because they are frustrated about where they are.
Perhaps he/she isn't getting any

jamesd

zygurat789 wrote: »

TBH I'm not sure what is so great about drawdown

100% pension for the spouse automatically and after tax the pot that remains can be inherited. Higher income for younger (under 75 or so) retirees is available, depending on investments and whether enhanced or impaired life annuity is available. Lower risk available instead if desired, at the cost of reduction in income.

zygurat789 wrote: »

I challenge you to justify that

re safer than an annuity is easy. Just choose to invest in UK government bonds held to maturity and your capital and income is guaranteed by the UK government which is more reliable than any insurance company.

There will be a significant income penalty for that ultra-safe option but low risk and higher income can be obtained by adding corporate bond, property and equity income funds to the mixture.

You can choose any level of risk, from safer than an insurance company to completely reckless.

But it's not for everyone. It's more interesting for those who have been actively managing their investments before retirement and who are happy to continue doing so after retirement. It's unsuitable for those with no investment experience, except if professionally managed. This means that it's unsuitable for most people, at least long term, but worth mentioning so that those it's suitable for are aware of it.

At the moment it's particularly useful as a tool to delay buying an annuity while market conditions are unfavourable, even for those who will buy one or more annuities eventually. Used this way it's a risk reduction tool compared to buying an annuity at a single point in time.

cyclonebri1

Astounding :wall::wall::wall::spam:


What's the phrase? "May God protect me from myself"