Prudential With Profits Pension - Stick or Twist?

Mothman

Thanks to all for taking the time to reply it is much appreciated, this stuff is a real minefield to navigate. I used to think I was reasonably savvy but having started to look at pensions I realise I am not.

I have found the original Scot Am (Pru) T&C's but they don't mean much to me, though I did find the bit about the guaranteed 4% bonus.

Regarding the FL pension, is it the case that if I want to take a 25% TFLS before 65 I would have to transfer into a scheme that allows drawdown and that the 75% remainder would then have to be held in a drawdown fund and is it true that these drawdown funds typically attract poor rates of return i.e. 0.5%-0.8%. Or are there better alternatives?

kidmugsy

Mothman wrote: »

Regarding the FL pension, is it the case that if I want to take a 25% TFLS before 65 I would have to transfer into a scheme that allows drawdown and that the 75% remainder would then have to be held in a drawdown fund and is it true that these drawdown funds typically attract poor rates of return i.e. 0.5%-0.8%. Or are there better alternatives?

(i) You could just take the TFLS at any age from 55 onwards and buy an annuity with the rest, but a lot of advice is that one should leave annuity purchase until much later in life (e.g. 75 or even 80).

(ii) The poor returns point is rubbish. You can invest your drawdown fund in any of a wide range of assets, the return from which could be much higher, or much lower, than 0.5%-0.8% p.a. The choice would be yours; since the return will occur in the future, you can only guess at it, unless, for instance, you decided to hold a ladder of gilts to maturity. Here are the current yields of gilts of different dates.
http://markets.ft.com/research/Markets/Bonds