Are annuities really such a bad deal?

xylophone

Having married a brit and moved here whnich was very high risk behaviour.

:eek:

Crumbs! And I thought that Johnny (Joanna) foreigner thought Brits were dull!

TBC15

atush wrote: »

But then again, I am not risk averse. Having married a brit and moved here whnich was very high risk behaviour. .

What’s the risk in coming to the UK via marriage? The UK is generally regarded as the place to be.

dunstonh

As i mentioned on other threads this week, I have done two annuities post announcement. In both cases, the annuities were enhanced and provided double the income that a savings account/investment would reasonably generate without all the investment risk and ongoing reviews.

Annuities are not going away. They will just not likely be used for small pots or for those with other secured income.

kidmugsy

showmethehoney wrote: »

Hmm. I was hoping for more comments on the annuities than the NICs.

My 'expectation' was based on the Green Paper which a few years ago said 30 years NICs would be enough for a full single tier pension and was what people were basing their plans on. People weren't expecting the sudden change in the White Paper, that's why I think it's unfair. I agree it's still not ungenerous though if I don't buy more 'stamps' I'd actually be better off under the old system. And with the complication of having opted out for a while I have no idea how many extra years I will have to, or be able to, buy to get a full pension.

Ros Altmann thought the change "unfair" - that's good enough for me.

You're not engaging with the point that the reduction from 44/39 to 30 must therefore have been massively more unfair.

bigadaj

TBC15 wrote: »

What’s the risk in coming to the UK via marriage? The UK is generally regarded as the place to be.

Not if you're American, they can be very parochial, atush I don't mean you, just a generalisation.

bigadaj

How do annuity rates compare with capped drawdown though.

I briefly looked at them a few months ago and was surprised how generous the capped drawdown rates were, you could be drawing well into the teens in drawdown by the time you get into your eighties.

There is of course investment risk which doesn't exist in annuities but using average investment growth rates, allowing for conservatism given that some assets will need to be in low risk classes, then capped drawdown seemed a better bet to me.

Linton

bigadaj wrote: »

How do annuity rates compare with capped drawdown though.

I briefly looked at them a few months ago and was surprised how generous the capped drawdown rates were, you could be drawing well into the teens in drawdown by the time you get into your eighties.

There is of course investment risk which doesn't exist in annuities but using average investment growth rates, allowing for conservatism given that some assets will need to be in low risk classes, then capped drawdown seemed a better bet to me.

At the moment they are similar. But the capped drawdown rates are arguably a little high to ensure the safe provision of a longer term than average steady income. They would be better if you were in a position to adjust your drawdown amounts depending on market conditions to avoid excessive depletion of your capital when prices were low.

So yes - if you are able to manage an investment portfolio and dont want an income guarantee it would probably be better to go for drawdown.

atush

showmethehoney wrote: »

Sally;

Looking ahead, I really don't think state pensions can be said to "insufficient" for most people. Imagine a couple - it's tougher for singletons, believe me, I know - both with a minimum of £147 in today's terms. They will probably have been auto enrolled into a second pension too, plus anything they've put aside themselves. With the mortgage and kids out of the way that's enough to be reasonably comfortable on. Any more generous and you have to wonder how it is going to be funded.

I really am not sure you live in the real world. Yo cannot live comfortably on the State pension.

Couples will find it easier than singles. but it will not be easy.

Wake up and smell the coffee.

atush

TBC15 wrote: »

What’s the risk in coming to the UK via marriage? The UK is generally regarded as the place to be.

Not if you are american perhaps.

The risk was, I left my job/career, i left my state pension, and I left my family.

Huge risk for a country that didn't even serve ice in soda then lol

atush

showmethehoney wrote: »

Not meaning to sound bitter and twisted, but it sounds as though you can afford to be less risk averse than I can! I can't gamble with the little I have. I'd have been thousands of pounds better off if I'd stuck my money in the bank rather than pay an "expert" to look after it.

Not meaning to sound smug, but i think you spent your money on other things and weren't MSE?

I was far more risky when I started ( a problem of many perhaps) and the only money I had to 'play with' was the CB I got for the children. So taking out 25% for spending I invested the rest.

I carpet bagged building societies (chance of a gain and capital not spent) then started up a stock broking acct. I lost money but made more. It was a seat of the pants education but served me well.

I learned abt risk (all kinds not just investment risk), i learned to not panic when markets change suddenly, I learned to take profits, to sell some losses and to not catch a falling knife.

I dont think this is beyond most people to learn (and more if you just apply yourself rather than waiting for apples to fall from your tree.