How to get pension / income with £2000

swebber

Hi all, I hope someone can give me a bit of assistance with this.

My Grandad passed away about 10 years ago, leaving my Mother as execution of his will. He was seperated form my gran, but wanted £2000 invested, to give her an income of £20 per month.

The £2000 wasn't enough at the time, so my Mum invested £5000, but she got into some trouble and so cashed that investment in and invested £2500, into a income based ISA (don't know exact details).

Anyway, it's no longer paying out £20pm and has damaged the capital, even though they company guaranteed her it wouldn't. (Different story)

My Mum is disabled and can't cope with looking into this, I have said I'll do it, but have no idea, what I should be looking for.

Can anyone help ?

dunstonh

If she is under the age of 75, she can purchase an immediate vesting pension (IVP). At age 65, for example, this can provide a gross income equivalent to around 10% of the amount invested.

I don't know what sort of availabilty IVP products have outside the IFA market. I know Hargreaves Lansdown (cheap IFA often mentioned on the website) do the Standard Life IVP but they will not shop round for best rate as they are execution only. A local IFA could help you if you don't feel upto it yourself. If your mum is over age 75, its too late for an IVP.

swebber

Thank you.

But would one of those give the required income for £2000 ?

and what if she is over 75?

I'm afraid my Nan is V old fashioned, so doesn't talk about her age.

dunstonh

If she is over 75 then no pension product is available for her.

There is no way that £2000 can produce £240 a year guaranteed. An IVP would be looking at around £190-£200.

Its been a while since i did an IVP but it is possible that the options would be limited at £2000 as i think most upped their minimum premium to £3600 gross.

DavidLaGuardia

dunstonh wrote:

If she is over 75 then no pension product is available for her.

There is no way that £2000 can produce £240 a year guaranteed. An IVP would be looking at around £190-£200.

Its been a while since i did an IVP but it is possible that the options would be limited at £2000 as i think most upped their minimum premium to £3600 gross.

Is it not possilbe if person is not taxed

Gross= £3,600
Net=£2,808 (borrow the £808)
Tax Free Cash=£900 (pay back the £808)
Cost of annuity purchase=£1,908 (less than £2,000)
Annuity Purchase Value=£2,700 (£3600 less TFC)
Rate Required for £240=8.89%
Surely a 74/75 year old can still get this rate or am I wrong?