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CannySaver_2

srcandas wrote: »

Tx Canny. Seems a good plan but my position is:

About £80000 pot has guaranteed GARs. So I'll use 25% to clear mortgage and the rest as annuity (9.3 to 9.8 so unlikely to beat it looking around).

That leaves £100k pot of which I might take 25% lump leaving 75k. Now I like the idea of capped draw down* but I'd like to compare the best annuity I might get (esp. as if I cash in my CDD later I cannot see annuities being cheaper in the future).

[* I have an ongoing company and thus job, I will not draw for a few years leaving it invested, and will be further investing in wife's SIPP (for next 10 years) so have room to play.]

Taking action one above I get a good idea of what might be offered.

However would I be right in thinking that even with an IFAs best efforts I'm not going to beat the top offer by 5% more pension ??? I know if it was five percent that over many years that would be a considerable amount so the IFA costs would represent a good investment. It might also be enough to tempt me away from CDD.

I don't smoke, drink heavily or have any health issues so that is not a factor - touch wood

The other issue that confuses me is that if I pay an IFA the commission still exists. So unless I get it as increased pension where doese it go?

Ok, a few points:

1. Why use tax free cash from a pension which has a GAR of circa 9% to repay mortgage debt which is likely to be acruing interest at a significantly lower rate? I'd use the tax free lump sum from the £100k pot instead

2. Capped Drawdown v an Annuity, both likely to give the same level of income (assuming you take max GAD), so it's down whether you want to remain invested v guaranteed income and the more flexible death benefits with Capped Drawdown

3. Re costs when buying an Annuity, its a no brainer to use an IFA. If you go direct the commission is still charged but is taken by the Annuity provider as a windfall. See an IFA, let them formulate a plan for you, which if they include an Annuity as part of will help meet their fees. They may also get paid on the GAR if they handle the paperwork for you, which again will help cover the cost of their time

Hope this helps.

The Canny Saver

jem16

srcandas wrote: »

The other issue that confuses me is that if I pay an IFA the commission still exists. So unless I get it as increased pension where doese it go?

If you pay the IFA a fee as opposed to using commission, then the annuity rate is enhanced.

srcandas

Many tx Jem and Canny. The fog is clearing and I think by 27th August (D-day) I should be confident of my decision - something I doubted till I found this place :beer:

Canny you are right about the 25%. I hadn't realised being a 20% tax payer the 25k would only last about 13 years. Guess I might live longer than that.

So that leaves the 100k pot less 25% I will need. Being in Scottish Equit w/profits and Windsor Life (now reassure) I think any future growth is not likely to be better than poor so that leaves Annuity or CDD. I'll throw that out to the two IFAs I know and see what they offer as a costed route to a decision. I'll let them know I am aware of the commission.

I have to keep rereading the investment advice here to keep my feet on the ground. I have in a month been 'in-out-in' of Tesco and am showing a 5% profit and my fund ISA (which has a good spread) has grown 4%+ in 6 months. Have to keep reminding myself this is luck

Be back soon