Are pensions one big rip-off?

ajbell

What about the fact that someone retiring today has to lock into historically low rates for life?. Could there be a better solution?.

Proxy

walkern wrote: »

Hello,
I've just received my yearly pension statement (paying in 18%, about £8000 a year - 50/50 with companey). It says at current rate my pot will be worth £405,000 at retirement.

I've just spent two minutes looking for an annuity for a 65 year old with 65 year old spouse and 50% spouses benefit with a pension pot of £400k .

I can get £21k per year. Do i win at money?

dunstonh

What about the fact that someone retiring today has to lock into historically low rates for life?.

If that is the option they want then so be it. If they dont then they can use the alternative options that offer the potential to give a higher income level later (or lower if the make the wrong guess)

jedsonack2

Actually,
First let me thank Walkern for posting a thread about pension and pensioners.
Pension is actually a guarantee for the life after job i think.

Old_Slaphead

Proxy wrote: »

I've just spent two minutes looking for an annuity for a 65 year old with 65 year old spouse and 50% spouses benefit with a pension pot of £400k .

I can get £21k per year. Do i win at money?

That's flat rate.

RPI indexed comes out at about £12.5kpa

dunstonh

Old_Slaphead wrote: »

That's flat rate.

RPI indexed comes out at about £12.5kpa

The OP was using £10k for level basis on his calculations.

Perelandra

jedsonack2 wrote: »

Actually,
First let me thank Walkern for posting a thread about pension and pensioners.
Pension is actually a guarantee for the life after job i think.

An annuity is a guarantee for life; but an annuity is only one option for your pension pot. Because historically most people (I think) have bought annuities with their pension pot, the two terms can seem synonymous- but they're not the same thing.

atush

I've just received my yearly pension statement (paying in 18%, about £8000 a year - 50/50 with companey). It says at current rate my pot will be worth £405,000 at retirement.

Searching for annuities the best I can find with spouse gives £10,000.

But you could get nearly 5.3% a year for a joint life annuity (per 100K) so in your case that is income over 20K per year? You are, I think, not understanding what you are asking for in your quotes and are most likely looking at the most expensive option in the annuity market, ie index linked pension joint life basis.

And of course you didn't realise there was drawdown. Which can be 100% inherited by a spouse.

Proxy

Old_Slaphead wrote: »

That's flat rate.

RPI indexed comes out at about £12.5kpa

Yeah, as Dunston says, the original calculation implied flat rate.

atush

jedsonack2 wrote: »

Actually,
First let me thank Walkern for posting a thread about pension and pensioners.
Pension is actually a guarantee for the life after job i think.

There are thousands of posts in this forum about pensions and pensioners? Why is this uninformed one special to you?