annuity problem

redandy599

Hi

my wife has a pension that she has not paid into for years and is now able to buy an annuity as she is 55 she can also take a tax free sum ,our problem is this the whole of the pension is worth less than 20k and it is with phoenix:eek: with who we are meant to have gauranteed rates, as she still has at least another 5 years of work ahead of her is it worth just moving the whole lot to her nhs pension(still need to find out if we can do this)or holding out for the rates which may be good.

my instict says dump phoenix as they got enough money out of our endowments:mad: without spoiling her pension as well,any advice would be gratefully recieved.:)


thanks

dunstonh

This thread would be better in the main pensions section as it is off topic for this section. If a moderator spots this, please move it to pensions main.

as she is 55 she can also take a tax free sum

55 is very young to commence a pension. Any reason why she would take it at that age?

,our problem is this the whole of the pension is worth less than 20k and it is with phoenix with who we are meant to have gauranteed rates

Why is that a problem?

is it worth just moving the whole lot to her nhs pension(still need to find out if we can do this)or holding out for the rates which may be good.

You can only transfer in to NHS pension in first 12 months of membership.

my instict says dump phoenix as they got enough money out of our endowments without spoiling her pension as well

Being blunt, that is a really silly mindset to have. Firstly, Phoenix are a company that buys up other companies life and pension books. They have dozens of companies books under their brand. Some of those companies were failed life companies. Some were fine but just didnt want their life and pensions book any more. There are some very good policies under their brand. And some very poor ones. Just in the last week, I dealt with an ex Pearl one with not only guaranteed annuity rates from age 60 but also a guaranteed minimum fund value. That is highly valuable. Now, taking your view, you would have lost those benefits because of some misplaced and bad opinion.

In your case, why take it at 55? why lose the guarantees? Are there other guarantees you are not aware of?

redandy599

dunstonh wrote: »

This thread would be better in the main pensions section as it is off topic for this section. If a moderator spots this, please move it to pensions main
.
Yes thanks for that im not that sure how to do that but will give it a go



55 is very young to commence a pension. Any reason why she would take it at that age?

we orignally thought about taking the 25% lump sum to use for a building project we have on our home and putting the rest in her nhs pension as we now know thats not possible its back to the drawing board,we were really not sure just what to do with it,

Why is that a problem?

after the problems with the endowments, phoenix are not to popular with me also 20k at 55 does not seem a lot to try and put in another pension elsewere



You can only transfer in to NHS pension in first 12 months of membership.

ok,thats good to know as its one less thing to check on.


Being blunt, that is a really silly mindset to have. Firstly, Phoenix are a company that buys up other companies life and pension books. They have dozens of companies books under their brand. Some of those companies were failed life companies. Some were fine but just didnt want their life and pensions book any more. There are some very good policies under their brand. And some very poor ones. Just in the last week, I dealt with an ex Pearl one with not only guaranteed annuity rates from age 60 but also a guaranteed minimum fund value. That is highly valuable. Now, taking your view, you would have lost those benefits because of some misplaced and bad opinion.

yes i agree so she needs to check what the rates will be and make a decision from there?

In your case, why take it at 55? why lose the guarantees? Are there other guarantees you are not aware of?

no reason at all, just was not sure that she would want that kind of money sat earning very little.Also i just did not want to look back when we both retire and think why did i not look into this and find it was better off elsewere.the original plan was with sun alliance and i have been told before that the guarantees are quite good but i did wonder if it was elsewere over the next 5 years it may earn more in interest.

dunstonh

just was not sure that she would want that kind of money sat earning very little.

What makes you think it isnt earning much? Especially if you factor the GAR into the calculation. That is frequently where the real value is.

the original plan was with sun alliance and i have been told before that the guarantees are quite good but i did wonder if it was elsewere over the next 5 years it may earn more in interest.

What are the GARs at age 60 and 65? If they are say 50% higher than the open market rate then any alternative would have to grow by 50% in the 5/10 years just to pay the same. That is ignoring any growth you get on the existing plan.

Why is that a problem?

after the problems with the endowments, phoenix are not to popular with me also 20k at 55 does not seem a lot to try and put in another pension elsewere

Age 55 has lower annuity rates, less time for growth and you lose the guaranteed annuity rate. Plus, if it isnt needed then income tax could be an issue as well as lower death benefits (in case of early death)

An endowment is an endowment. A pension is a pension. Its a bit like saying no-one should drive any vehicle because you could have an accident on a bike. The fact it is Phoenix shouldnt be an issue. Phoenix quite possibly was a good thing to happen with a number life & pension books they bought compared to the alternative.

jamesd

It's very important to know the guaranteed annuity rates. They can easily be twice the current market rate, maybe even more. You don't need huge growth if you get two or three times the annuity income for your money!