Rightmove March +1.6% MoM +6.8% YoY

AndyGuil

mayonnaise wrote: »

I can imagine many will opt to pick up a BTL or two instead of signing up for a meagre annuity.

I think this is very likely to happen.

de1amo

a BTL offers...growth in capital as more and more retirees buy into the market....rent as income....and instant access to cash(selling up)...i struggle to see how an annuity can compete??

wotsthat

I can't see hoardes of people getting into BTL on the strength of the pension changes. Withdrawing cash from a pension and paying the marginal rate of tax seems quite an inefficient investment.

I'm not a BTL but I always get the impression that most are looking to get out rather than buying in at retirement.

mayonnaise

wotsthat wrote: »

I can't see hoardes of people getting into BTL on the strength of the pension changes. Withdrawing cash from a pension and paying the marginal rate of tax seems quite an inefficient investment.

In many cases it will be inefficient indeed.
In many others, it might not be that clear cut?

Imagine a basic rate payer coming to retirement at 65 with a modest pension pot of about ~200K. I'm not that clued up on annuities, but I imagine it would be a stretch to get an annuity of 1K per month out of it.

Or take the hit and cash in 170K.
A flat of that price around here would fetch close to 1K rent also.
Most importantly, there would be an asset to pass on.

I also believe there will be a psychological effect of "having the cash now", even if it would make more financial sense not to withdraw it all.

MFW_ASAP

mayonnaise wrote: »

In many cases it will be inefficient indeed.
In many others, it might not be that clear cut?

Imagine a basic rate payer coming to retirement at 65 with a modest pension pot of about ~200K. I'm not that clued up on annuities, but I imagine it would be a stretch to get an annuity of 1K per month out of it.

Or take the hit and cash in 170K.
A flat of that price around here would fetch close to 1K rent also.
Most importantly, there would be an asset to pass on.

I also believe there will be a psychological effect of "having the cash now", even if it would make more financial sense not to withdraw it all.

The alternative to buying an annuity (or withdrawing all of the money to invest in BTL) would be to invest in exactly the same corporate bonds and government gilts that the annuity company would have invested your pension into (and perhaps put a little into equities for a potentially higher return) and enjoy the benefit of a steady income but still have access to the money for inheritance, etc.

As I approach retirement age I'll be gradually moving out of equities and into bonds/gilts anyway, to protect me from any stockmarket downturns. My pension pot will already be in 'annuity mode' and so instead of having my returns re-invested as I do currently, I could simply take them as an income.

de1amo

...if there wasn't going to be a mass exodus why did all the insurers drop on the news.....a tax hit on withdrawing will be more than be paid back by growth in capital growth on a property....an annuity will never grow once taken...property will be seen as a safe haven away from all the financial crooks.....like banks!

AndyGuil

An annuity isn't something you can pass on in your will so property investment is the obvious choice. You get cash every month and have an asset that increases in value.

de1amo

to me it is such a no brainer....i just can't see the appeal of property being out shone by an equity with its meager fixed returns and as you say it can't be passed on to the family!!....if pensioners dont want to be landlords they will install their kids in properties (with rent income)!

Aberdeenangarse

chucky wrote: »

From reading your post I asked an estate agent to look at my properties and got a very present surprise from their valuations.

I'm no debating with myself to stick or twist.

Come on Chunks we all know the only property you've got is a Timeshare in Majorca.As for debating with yourself, that could make you go blind!:eek:

shortchanged_2

Aberdeenangarse wrote: »

Come on Chunks we all know the only property you've got is a Timeshare in Majorca.As for debating with yourself, that could make you go blind!:eek:

You won't get an answer I'm afraid.