Annuity cash in

s5cyh

My husband bought an annuity a few years ago that we planned to keep until he was 65. Unfortunately our circumstances have changed and we are looking to cash this in. Is this possible when the pension rules change in April, can we do it ourselves and what percentage would we lose? We were last quoted a value of £34k

kidmugsy

You can't "cash in" an annuity. But according to this morning's Telegraph the government is considering changing the law to allow companies to compete to buy out annuities. So keep your eyes on the newspapers.

This proposed policy, by the way, was forecast in the last few days by a shrewd observer on this very forum.

P.S. I don't understand "we planned to keep until he was 65." Can you explain?

s5cyh

We were planning on buying a pension with it. Sorry we're not well up on this kind of thing - thanks for your help

BobQ

kidmugsy wrote: »

You can't "cash in" an annuity. But according to this morning's Telegraph the government is considering changing the law to allow companies to compete to buy out annuities. So keep your eyes on the newspapers.

This proposed policy, by the way, was forecast in the last few days by a shrewd observer on this very forum.

P.S. I don't understand "we planned to keep until he was 65." Can you explain?

http://www.bbc.co.uk/news/uk-politics-30670639

This refers.

kidmugsy

s5cyh wrote: »

We were planning on buying a pension with it. Sorry we're not well up on this kind of thing - thanks for your help

An annuity is a "pension" i.e. a series of annual, or more often monthly, payments of income. Maybe you mean your husband has a pension "pot" worth £34k. In which case if he is 55 or older he can withdraw money now: not all providers are set up to do it, so if his isn't he'd need to transfer to one that is. He'd also want to check the charges, if any, of the provider he's leaving and the one he's joining, and also to check whether there are any advantages with the present provider that he'd rather not lose.

Once/if he's with a suitable provider, he can withdraw 25% tax-free, and can also take a limited amount of tax-exposed income in tax year 2014-2015 under the arrangement called "capped drawdown". Then in tax year 2015-16 he can withdraw as much tax-exposed income as he wants. It's usually best to draw out the money in amounts low enough to make sure you're not going to be paying higher rate tax. Or perhaps even to avoid income tax altogether. (The personal allowance for 2015-16 will be £10,600.)

The provider we have used for "income withdrawal" (aka "income drawdown") is Hargreaves Lansdown. We've found their service excellent. You could always visit their website to learn more. We've found their charges bearable for our modest sums i.e. about the size you're talking about.

Linton

s5cyh wrote: »

We were planning on buying a pension with it. Sorry we're not well up on this kind of thing - thanks for your help

I think you may be confused with terminology. One buys an annuity with a pension, not the other way round. An annuity is a product which pays you a steady income until you die. Is your husband receiving a steady income from it?

If not I guess that what you call an annuity may be a simple lump sum held in a pension. In that case you probably (depending on exactly what sort of pension it is) can do what you want with it after April, subject to appropriate tax.

s5cyh

Thanks for the reply - and I think you're right about being confused with the terminology!! What we did was amalgamated three pensions and bought the annuity which we planned to start drawing of when he was 65 and retired so currently it isn't being drawn on.

jem16

s5cyh wrote: »

Thanks for the reply - and I think you're right about being confused with the terminology!! What we did was amalgamated three pensions and bought the annuity which we planned to start drawing of when he was 65 and retired so currently it isn't being drawn on.

So you amalgamated 3 pension pots into one single pension pot?

If you had bought an annuity you would already be drawing an income from it.

atush

you either haven't bought an annuity (as you would be getting an income), or you are in Drawdown and not taking income?

You again are not with the lingo.

REad to us from any documents you have- that could help as we are clueless.

s5cyh

Thanks everyone - no wonder us mere mortals have no clue when it comes to pensions etc. I will get my paperwork out as requested and get better/ more specific information and ask again

s5cyh

Thanks for the previous help - I'm not sure if this will be seen but as an update the product is a Fixed Term Annuity with Just Retirement

I hope this makes the request for help clearer