pension annuity help

dunstonh

That assumes that the fund remains static for 10 years.But the whole point about drawdown is that the fund continues to rise in value over the long term, covering inflation.

If all goes to plan...

Of course it's wonderful for the insurance industry to be handed hundreds of millions of poounds every year by annuitants so that the company benefits from the growth on excess capital - while the poor old annuitant get his money paid back to him (if he lives long enough) plus the gilt yield.:( Might as well leave the money in the bank - at least you'd still have the capital.

Annuities are hardly a cash cow for anyone in the industry. Drawdown is more profitable for advisers and pension drawdown providers. In reality, I cant give a flying fig what various companies earn out of it because it doesnt matter. You buy a product for how it suits you and not how much someone is earning out of it.

At least now people are beginning to wake up to how pathetic the annuity deal really is and in particular to its risks: because over 20 years, inflation will halve the value of that "guaranteed" income.

Not if you purchase an index linked annuity.

Ed, you are very tunnel visioned when it comes to products. You look at things that suit you and think that they should suit everyone else and any product that doesnt suit you shouldnt be used. Not everyone is the same as you. Everyone has a different perception of risk and there are multiple options to cover those risks.

As long as people are aware of the risks and understand the consequences if it goes wrong, then there is no problem. As said higher up, there are pros and cons to both options.

Message to the OP.... are you keeping up with this?

EdInvestor

Well, the OP had been offered an annuity and posted to ask about other options.So that's what we're discussing.

What do you think about "With-profits annuities" DH?

jem16

EdInvestor wrote:

Well, the OP had been offered an annuity and posted to ask about other options.So that's what we're discussing.

What do you think about "With-profits annuities" DH?

I read exactly the opposite to this Ed, The OP quite clearly states her husband wants an annuity. She may have been looking for alternatives or she may have been looking at the best place to get this annuity - it isn't clear.

jumbles wrote:

my husband is looking at retiring mar 07 ( age 60) we have an amount of approx £100k through various policies, and advisor is talking about annuities ( my husband wants it so that should either die the other is covered) any ideas of best place for this money. Also will have rent from a building we own do this won't be our only money

Looking back it seems to be you who mentioned drawdown.

EdInvestor wrote:

A joint life 100% pension is expensive ( especially if it's index linked). You might be better with income drawdown, where your fund is left invested and you take an income.This way hopefully it will grow and then if you want an annuity later, you can buy one when you get older and rates are better.

dunstonh

What do you think about "With-profits annuities" DH?

Not a fan. However, Pru with profits annuities taken an a 0% ABR could offer good potential for growth above an index linked annuity and with the ABR at 0%, you are reducing a lot of the risk that exists with this type. That said, if you are willing to do that, then you are probably good for drawdown which is a more modern way of doing it.

EdInvestor

jem

The OP quite clearly states her husband wants an annuity.

She says her husband has been offered an annuity, not that he necessarily wants one. What he wants is said to be

that should either die the other is covered)

... any ideas of best place for this money.

This suggests she is interested in looking at other ways of being "covered" when one of them dies.It seems unlikely she wants to compare annuity rates presumably the IFA has already done this, but if so, try here:

https://www.fsa.gov.uk/tables

Also will have rent from a building we own do this won't be our only money

...this suggests that there is scope for some risk, so drawdown/phased drawdown/investment annuities should be discussed.

Maybe the "IFA" is actually a tied agent salesman and has no drawdown product to offer,so isn't discussing it.

Cardew

May I say as an ‘interested amateur’ I really do enjoy both the content and style of the exchanges between Dunstonh and EdInvestor!

cheerfulcat

Hello, jumbles,

we have an amount of approx £100k through various policies

Are these pension funds?

any ideas of best place for this money

Equities, in one form or another.

One of the problems with annuities, especially for people as young as you and your husband is that the rates will be very low, especially if you want joint life & index linking. Another is that you lose your capital. OTOH, rates are not likely to increase in general ( though they should still be higher the older you are when you purchase the annuity ), and the income is guaranteed ( as long as the provider remains solvent! ). Also, you needn't worry about capital values or money running out. And if it is a purchased annuity ( as opposed to the pension annuity ) there are tax advantages.

If you are happy taking risk then a more flexible plan, like Ed's, might suit.

jem16

EdInvestor wrote:

jem



She says her husband has been offered an annuity, not that he necessarily wants one. What he wants is said to be

that should either die the other is covered)

This suggests she is interested in looking at other ways of being "covered" when one of them dies.

You may be right Ed - I hadn't looked at it like that. I had read it as "my husband wants it so that should either die the other is covered" - it being the annuity.

The wording, IMO, is a little ambiguous and only the OP can clarify this. Hopefully she will be back soon to do this.

shiredeon

For what it's worth the only thing that stopped me from ploughing more money into my pension for years was the fact that anuity's were compulsory, i felt that i had no control over what was in fact my money,the same went for my collegues,

When compulsory anuity's were scrapped we all paid more in.

I know everybody's situation is different but i dont see drawdown as a risk, after all your getting your own money back, plus or minus any interest from investments chosen by the investee.

You could call an anuity high risk, high risk in as much as you could only get back a fraction of your hard earned money through low rates or even worse if you died early.

My opinion only obviously, but genuine.

jumbles_2

Hi everyone

it's me, didn't think that there would be this much to absorb, many thanks for all the suggestions, at moment waiting to see Advisor ( he is the one talking about annuity) My Husband wants whatever so that when one dies the other still has the money or money


is drawdown the one where you have a pot of money can draw approx 6% per annum and pay outlandish charges for someone to oversee it ( if so another advisor mentioned that and the charges were in the region of £12k to set up and £5k pa charges, on a pot of approx £250K ( inc building ( which pays an annual rent)

We will have to take time to look and digest what you have said, but it seems that being greatly overweight( wait to diet- GOOD !) smoking ( gave up 1 yr ago but could re-start) etc means more money

Again thanks- will let you know the outcome
:T