Annuity Purchase

Monobloc

Need advice please.My wife has a personal pension with Scottish Widows.Her retirement date is in October this year.The transfer value is 24K.She plans to take the lump sum and purchase an Enhanced Annuity with the remainder.If she engages the services of a I.F.A.,how much will he charge?.Also,who pays him?,my wife or the Pension provider?.
S.W. are offering a level annuity,[5yrs. grntee.,reduced pension for spouse] of £738 P.A. on the 18K remainder.Can this be bettered by going down the enhanced annuity route?.
BTY can a person take the lump sum and defer buying an annuity to a later date?.

jamesd

A person can take the lump sum and leave the rest invested inside a pension until their death and then that of their spouse if they feel like it. No compulsion at all to buy an annuity or take any income from it. If Scottish Widows said this isn't possible all that really means is that they don't offer that option and the money needs to be moved somewhere else to do it.

It's also not necessary to buy an annuity to get income from the 75%. Capped Income Drawdown can be used instead. This leaves the money invested and income is taken from the investments and paid out each month as normal. If ultimately a non-spouse inherits there'd be a 55% tax charge, also 55% if the spouse wants it outside a pension as a lump sum. If the spouse inherits into their own pension pot they would get 100% of it, no tax charge, to provide them 100% pension income. Unlike an annuity the potential income depends on how the investments perform. If Scottish Widows doesn't offer income drawdown the money could be transferred to somewhere that does.

If she's eligible for an enhanced annuity it would beat the income level of a standard annuity. Even for a standard annuity it's unlikely to be best to buy the annuity from the place where the money is currently invested. If an IFA is used, commission paid from the annuity provider would normally be the way they get paid at the moment.

Monobloc

Many thanks for your advice jamesd,appreciate you taking the time to answer.Will consider the points you made.