On the horns of a pension dilemma

downshifter50

The news about the possible £155 pension in 2015/16 has put me in something of a tizz - I'm guessing I'm not alone!



I'm 60, and have just put my state pension claim on hold after hearing the announcement. If I take my state pension now I’d get £130 a week – if I defer to 2013 I’d get £157 pw.


I’m tempted to defer but need income in the meantime! My husband has a final salary index-linked pension of £21K per annum and I’d like to be able to keep my end up on the joint expenses front.


I have 2 pension pots, one of £226K with Equitable Life (unit-linked luckily): of this £62K is protected rights. Pot no. 2 is a stakeholder pension with Standard Life of £85K. From reading this board I now feel I should wait till 2012 before doing anything about my protected rights pension.


I’m thinking of an annuity, because I’m not at all clued up about investing.


My dilemma is: should I defer my state pension and take out an annuity now with the £85K in my stakeholder pension? Or would I get a better deal if I waited 2 years and rolled both pension pots up into one larger sum?


Or is there an alternative way to provide income of approx £6-7K pa over the next couple of years? I have about 40K in ISAs but they don’t generate much income.


All advice gratefully received- and many thanks for all the help received so far, which IMHO goes far beyond what’s offered in articles on other financial sites.

Loughton_Monkey

The £155 pension is simply a 'dream' at the moment and is being worked upon. It is said it will apply only to 'new' pensioners and therefore is very unlikely it will apply to existing ones - even though it is deferred.

Personally, in your situtation, I would probably be looking at taking my state pension, and perhaps the smaller stakeholder, to ensure full use of tax free allowance. The Equitable Life one can be taken when you choose.

dunstonh

I have 2 pension pots, one of £226K with Equitable Life (unit-linked luckily): of this £62K is protected rights. Pot no. 2 is a stakeholder pension with Standard Life of £85K. From reading this board I now feel I should wait till 2012 before doing anything about my protected rights pension.


I’m thinking of an annuity, because I’m not at all clued up about investing.

Whilst you may not be clued up on investing and DIY may not be suitable, you could always consider a servicing IFA for the drawdown. Or at least have a discussion on the pros and cons and decide which you feel comfortable with. This is a once in a lifetime decision. You cant change your mind later if you go down the annuity route. You need to get it right first time.

RichandJ

Loughton_Monkey wrote: »

The £155 pension is simply a 'dream' at the moment and is being worked upon. It is said it will apply only to 'new' pensioners and therefore is very unlikely it will apply to existing ones - even though it is deferred.

Personally, in your situtation, I would probably be looking at taking my state pension, and perhaps the smaller stakeholder, to ensure full use of tax free allowance. The Equitable Life one can be taken when you choose.

+1 from me, especially as the ELAS fund has PR, the restrictions on how you can take PR will be disappearing in a year's time. If you aren't aware these mainly have to do with having to provide a spouse's pension on any annuity purchased + providing for increases.

Dunston also has a point on the drawdown route but it does depend what you're comfortable with, a full review with an IFA could be money well spent.

downshifter50

Thanks everyone.

I'll definitely contact an IFA, especially as I need a solution that's reasonably inflation-proof (I hadn't bargained on having to become a pensioner so early).

It all feels a bit of a moving target at the moment, but maybe 'twas ever thus...