Is This The Best Income Drawdown Pension

steve2359_2

My Personel Pension Plan matures when I'm 60 in July. Its worth about £60k after I've taken 25% cash out.
I am down to 2 options, a 100% joint life level annuity of about £3500/yr or an income drawdown SIPP providing around £4800, a hugh increase. Initially I was afraid of the drawdown option because of the risk to capital with equities but I have just found that Annuity-Advisor have a scheme which sounds great.
They have a Secure Income Plan involving big names like Keydata, Fortis, KPMG and The Bank of New York. The investment is not in risky equities but in cash and insurance contracts in the USA, it is not guaranteed but they claim it is as safe as possible and will easily return 8% income without dipping into the capital which will be returned intact after 7 years. I cannot decide if this really is the deal it seems, has anyone any experience in this field?

EdInvestor

Can you post more details or a link to this plan?If it sounds too good to be true, it probably is.

You don't have to invest your entire fund in equities to do income drawdown successfully. A combination of shares, commercial property funds and cash can do the job: it's importnat to look at dividend paying investments so that you don't have to draw down capital.

What drawdown providers have you looked at? It's very important to cut costs to the bone to make drawdown work - some of these companies take almost half your income in charges :mad:

steve2359_2

Look on the keydata.co.uk site, I cannot explain anything. My problem with a SIPP is that I would not know where to invest it.

EdInvestor

The Secure Income Plan offers investors two levels of income or growth from two investment terms with a full return of capital at maturity.If you sell your investment before maturity you may get back less than the amount you originally invested. The product is structured to return your original capital in full after 5 or 7 years but this is not guaranteed.

Not only is it not guaranteed, it won't happen since it's impossible to get a 7% return from no risk investments after charges.

You should always expect a lower return from any guaranteed product as you have to pay for the guarantee.

If you want a high return, you need to take more risk.

My problem with a SIPP is that I would not know where to invest it.

Since it's the rest of your life we're talking about and you are about to retire with plenty of time to spare, I suggest you start learning about investment.It's not rocket science. You could try reading more threads on this site, or you could ask for help on the very useful SIPP discussion board over at the Motley Fool (https://www.fool.co.uk ).There are many experienced people there who can help.

steve2359_2

Thanks EdInvestor, you have made up my mind for me - an annuity. I will start investing, small scale and more for amusement, in the near future but on your advice this is too much to risk. Many thanks

EdInvestor

There is a new type of product just coming out, which is a halfway house between an annuity and drawdown.It might appeal to you for a few years, as the big danger of loicking into an annuity at 60 is inflation over the following 20-30 years which will seriously cut your purchasing power..

http://www.living-time.co.uk/livingtime/content/managed/pages/home_page.htm