Should I defer pension until 2015 ?

Savvy_amateur

I am due to retire in a few weeks time aged 65. I Have had quotes and was just about to decide on an annuity, but in the light of todays budget, should I defer until I am able to take the 100k all at once? We have enough income to live on without my private pension as my wife works, but she is 12 yrs younger. FA has done the work to find annuity and I don't want her to be out of pocket, but this budget has come as a surprise to us all. She advises us to go ahead for my wife's long term benefit from my annuity. How can I be sure she has our best interests at heart and is not more concerned about her commission if we dont go ahead ? Is it even an option to defer at this stage ?

atush

Well first of all, you say you dont' need the income as your wife is younger and works.

But when does SHE want to retire? As her income would then stop?

Second, if you cared most about yoru wife's income should you die, would not Drawdown on a 100K pot (well 75K after the TFLS) be better for that? As 100% of it goes to her (as a pension pot) after you die?

I would think you do need to stop and think, but I am not sure she is thinking with your needs at heart here, if she didn't at least broach toe subject of DD? But if you are very risk averse, an annuity could still be the way to go.

Too hard to say as you haven't told us enough. But I am suspicious if she didn't recommend DD for your wife's need to inherit.

Savvy_amateur

I am quite risk averse tbh. My wife wont retire for another 12 yrs and will have her own private pension of around 100k by then, which she could draw on if the rules don't change again. FA said if we were didnt go ahead with annuity we would have to move the pension from the current provider anyway, or they would just give us their annuity. She said she would charge 2.5k for this work as it was time consuming and complicated and I guess she has already done the searches for the annuity.

Thrugelmir

Savvy_amateur wrote: »

should I defer until I am able to take the 100k all at once?

It's not tax free. So not as attractive as it may seem.

Savvy_amateur

Thrugelmir wrote: »

It's not tax free. So not as attractive as it may seem.

I understand this, but really need to know if its the better option than an annuity. I am concerned that my FA may be more worried about losing her commission than gi ving advice in our best interest, as that was the impression i had after our brief conversation(I may be wrong). I am not a spend thrift and would not blow all the money on loose women and fast cars lol. :pWould it be best to play safe and defer for a year anyway? I understand that the value in the pot will fluctuate with the market.

greenglide

Savvy_amateur wrote: »

I am quite risk averse tbh.

If you are truly risk averse then an annuity may well suit you. Nothing in the budget really changes this.

Is the FA an IFA?

An IFA these days doesnt get commission they get an agreed fee from you which can either be taken from the pension pot (before it goes wherever it is going) or from you.

The age gap between you and you wife is important as it will increase the price of the annuity significantly (assuming that it isnt a single life one).

An IFA must take this into account. If, as you say, you don't need the money now then why not leave it invested any way - as both of you get older the price of the annuity will generally fall (i.e. you get more per month) and you could be more likely to qualify for an enhanced annuity.

All the time it is left alone it can be a provision for your wife if something happens to you.

dunstonh

I understand this, but really need to know if its the better option than an annuity.

It requires calculating.

I am concerned that my FA may be more worried about losing her commission than gi ving advice in our best interest

What commission are you referring to as there is no commission payable to advisers?

Annuities are not going away. They will remain an option and for many people will be the best option as they need a guaranteed income for life. Especially those that do not like taking on investment risk or shortfall risk (which are the alternatives to an annuity).

By the time you pay the tax on the lump sum, the amount left may to pay an income could well be a lot less. I did a calculation for someone yesterday afternoon and the annuity would provide double the income that a sensible withdrawal level on an investment would provide.

Moving_along_the_branch

Please forgive me if I'm hijacking your thread, I've only joined today so I'm not sure if I should start something new? My husband and I are in a similar situation in so far as he is due to retire in approximately two months. I will finish work at same time, but am not due to receive my state pension until next year. We have a small amount saved at the moment. I am not sure if instead of going for the enhanced annuity the Nationwide FA is currently researching for us, we should just take the TFLS from his DC scheme and his AVC fund. He will also have a small FS pension from his current employer. If we just take the TFLS do we have to leave (defer taking an annuity) the rest of the pot with the current pension management company until the new rules apply next year, or annuity rates possibly improved by next year.

dunstonh

I am not sure if instead of going for the enhanced annuity the Nationwide FA is currently researching for us

Why are you using a limited panel provider for such an important transaction? You should use an IFA or a restricted FA with no restriction in annuities. i.e. not Nationwide.

If we just take the TFLS do we have to leave (defer taking an annuity) the rest of the pot with the current pension management company until the new rules apply next year, or annuity rates possibly improved by next year.

I believe the Nationwide service is annuity only and does not consider or able to arrange any of the other potentially suitable options. So, again, not really suited to answer your questions.

At this moment in time, it is unknown whether crystallised pensions which would be done under current flexible or capped drawdown would be able to utilise the 2015 rules in future. (taking the lump sum and deferring income would crystallise the pension and as mentioned, Nationwides limited service does not cover that option).

Triumph13

Savvy_amateur wrote: »

We have enough income to live on without my private pension as my wife works, but she is 12 yrs younger.

In this situation my first instinct would be to move the pot to somewhere that allows drawdown, take the 25% lump sum then just take enough each year to use up your personal allowance. The balance can stay invested for the next 12 years in much the same investments as it has been for the last ten.

sandsy

Agree with Triumph. Given your pot size and other household income, I'd defer making a decision to purchase a product which is irreversible.

Go for a drawdown. Your adviser fee is due whatever you choose, bynthe sounds of it, so that's not the issue here