Do I have an Annuity?

Kerry_o'keefe

Years ago I moved 8 years of NHS pension ( I know I shouldn't have done) to a Legal and General product (A pension transfer bond) that will mature in 15 months time - I will be 55. It has protected rights and non-protected rights and a current value of £22000. Questions:


1. Is this an annuity?
2. When it matures, do I have to take L&G's valus or can I shop around for a 'best deal'?


Any help or advice appreciated


Dave

atush

Years ago I moved 8 years of NHS pension ( I know I shouldn't have done)

Under who's advice did you do this? Have you filed a claim for miss selling?

kidmugsy

Kerry_o'keefe wrote: »

1. Is this an annuity?
2. When it matures, do I have to take L&G's valus or can I shop around for a 'best deal'?

1. No, it's what people refer to in slang as a "pension pot". The annuity is, as the name suggests, the annual income you can buy with the pot (though most people prefer to take it monthly).

2. No, there's every advantage to shopping around, with one proviso marked "3" below. The first question is whether you should "crystallise" it at all i.e. whether you really want to turn it into an income stream at age 55, or whether you want to leave it invested for later e.g. because you may pay less tax on the income later. The second is whether you want to buy an annuity, or would prefer to do an income drawdown (also known as income withdrawal). Some people might think the sum involved is a bit low for that: I'm not sure. Either way you'd probably take 25% as tax-free lump sum, leaving £16500 for the annuity or drawdown fund.

3. The Big Proviso: you should check your paperwork to see whether your deal includes a Guaranteed Annuity Rate ("GAR"). If you have one it may be gold-dust, because the rates that were guaranteed years ago were typically much higher than you can get at the moment. If there is one, and if it is good, then you may well prefer to forgo the tax-free 25% and "fill your boots" with the guaranteed annuity. One restriction is that typically you have to fulfil the terms of the deal punctiliously e.g. if it says the GAR is offered for your 55th birthday, it's no use trying to start it one day later. The deal means precisely what it says on the tin. Why not check your paperwork and then come back to us?

(I'm assuming that you mean what you say when you refer to "a current value of £22000". If you mean a current value of £22000 p.a., all is different.)

Kerry_o'keefe

atush - no, did not file a claim for misspelling as I understood what was being sold and signed paperwork to that effect. Worked in NHA then employed at private hospital and thought Id never get another NHS job.
Kidmugsy - no do not have GAR. Yep total amount is 22K Have BUPA pension and NHS after I returned

kidmugsy

A member of my family did not want to face the hassle of income withdrawal, and didn't want to take the inflation risk of a level annuity, nor pay the high price of protecting an annuity from inflation. His answer was to start an investment-linked annuity, specifically a with-profits annuity.

Whether anyone sells them for a modest sum such as £16500 I don't know. Anyone?


EDIT: if you have health problems of the sort that would "earn" you a higher annuity, you might like to post a new entry asking for suggestions on that topic.