Saving rate query fro £100k

vigman

Having just done the usual juggling of my own ISAs and my wife's to get 2 - 2.3% I was interested in current TV discussions to see that annuities on £100k pension pot would get 'about £5,800' per annum.

First, is this the same as having £100k savings?

If this is correct, where are these companies generating 5.8%, please?

We have about 50K in ISAs and 50K in savings (mine at 3% Santander current acc) and as we are on a small income need to maximise what we get for our savings.

[Can't seem to edit typo in header!?]

TIA

Vigman

Linton

Annuities take the excess from the capital so the £100K will reduce over time.

Annuities work by the providers setting the payout rate such that all the money is used up near to the average life expectancy. Then the money left over by people who die early is used to pay the people who die late. Annuities act as an insurance policy against living too long such that your money runs out before you die.

A large factor in deciding whether to buy an annuity is what you want to happen to the money after you die. If your intention is to leave an inheritance to your children and are prepared to sacrifice some of your income to achieve it, then annuities are a bad idea. On the other hand if you want to safely maximise a steady income guaranteed until you die then an annuity could be right for you.

lr1277

I would guess two things about the 5800 figure:
1) The rate you get is based on the age you apply for the annuity. So that rate is probably for someone who is 65 or above. If you are less than 65, you will be offered less.
2) That rate is for one person, possibly male. If you need the money for two people, one male and one female, then you will be offered less as the annuity needs to be paid out for longer.

xylophone

With an annuity, you are " giving up" the capital to buy an income for life.
http://www.which.co.uk/money/retirement/reviews-ns/annuities/annuity-types/
https://www.moneyadviceservice.org.uk/en/articles/retirement

http://www.bbc.co.uk/news/business-26186361

I should think that advice from an IFA would be an essential before you went down this route?

lr1277

I should have also said, if you take out a single person's annuity, once that person dies, the annuity is no longer paid. If the partner is still alive, they don't get the annuity payment nor can they access the capital used to buy the annuity.


A quick search finds this table that gives you some idea about figures:
http://www.ft.com/personal-finance/annuity-table

CLAPTON

vigman wrote: »

Having just done the usual juggling of my own ISAs and my wife's to get 2 - 2.3% I was interested in current TV discussions to see that annuities on £100k pension pot would get 'about £5,800' per annum.

First, is this the same as having £100k savings?

If this is correct, where are these companies generating 5.8%, please?

We have about 50K in ISAs and 50K in savings (mine at 3% Santander current acc) and as we are on a small income need to maximise what we get for our savings.

[Can't seem to edit typo in header!?]

TIA

Vigman

looking at the money section of the Sunday Times
the quote

for a single person of 65 then the rate for 100,000 would be 5,955 pa(aviva)

for an index linked on for a single person then 3,551 pa

jimjames

vigman wrote: »

We have about 50K in ISAs and 50K in savings (mine at 3% Santander current acc) and as we are on a small income need to maximise what we get for our savings.

Vigman

I assume you mean cash ISAs based on quoting interest rates. If you are looking to maximise income have you looked at S&S ISAs rather than cash? Income funds are paying around 4% at the moment with the possibility of capital growth too (although capital not guaranteed)

Stompa

This gives some idea of annuity rates under various circumstances:

http://pluto.moneyadviceservice.org.uk/annuities

vigman

Thanks everyone for the quick and helpful replies!

Luckily, I had a final salary scheme (fairly small as my previous 10 years private pension from self employment that was absorbed into the local authority pension hardly bought 18 months of the FSS) so did not have to look into annuities for my pension pot.

Yes our ISAs are currently cash. I have looked at, but so far passed over, S&S ISAs having had bad experiences with unit trusts and similar in the past.

I just feel I can't risk any chance of loss of capital with anything relating to S&S funds as my income is now so low.

£20k of our non-ISA savings are in the Santander 123 account with the £500 'swap in and out trick' and two tiny direct debits.

I did buy £5k worth of premium bonds (I know, I know) and won £25 in the first valid month!

Thanks again

Vigman