Annuity rates

Froglet

atush wrote: »

does your 16 include years 16-18 (ie 3 extra)? Are you of poor health so much you wont get 15-20 years?

dint dismiss this before a proper evaluation.

I don't know which years,will my forecast I received,say which years they are? I will have to dig out the letter .


No I am in reasonable health,on medication but not anything really serious.I filled in a form last year with Aviva for a quote then,and was told it didn't make any difference to the amounts quoted.


I certainly am going to find out more about replacing some of the missing years.Thanks.

Froglet

kidmugsy wrote: »

No; no need for an IFA. Check whether L&G allow drawdown on the pension you have with them. If they don't, check whether there are any disadvantages or fees or penalties if you transfer to another provider. If all's OK, do a transfer. We use Hargreaves Lansdown; I also read good reports about Cavendish Online and AJ Bell. The procedure, at least at HL, is that you complete a form for the new provider and they handle all the rest. You'd want your funds held simply as cash at the provider if you plan to draw it out at the maximum rate consistent with avoiding income tax.

Sample calculation. Total pot: £30k. Tax-free lump sum to withdraw @25% = £7500. Income drawdown to take in first year = Personal Allowance vs income tax (£11k) less earnings (approx £3k) = £8000. That £15500 is available for e.g. buying more years of National Insurance, and contributing £2880 to a pension.

If you take the whole £8k in one swoop the provider will have to take an emergency rate of tax off it, so the best idea is to take out one twelfth of that at first and then, once the provider has been supplied by hmrc with the correct tax code, drawdown the remaining eleven twelfths. Otherwise you'd have the irksome business of claiming back the tax paid.



Nope. But you should phone/write/email the provider to check whether you could lose any of your final bonus if you transferred this pension too.

In your shoes I'd also read carefully anything Dunstonh volunteers about With Profits pensions.

Thanks for all the info.The pension I am considering taking out this year is the Aviva one,not the L and G.I am glad you don't think I need an IFA.Hubby had one for his,and although we got a reasonable deal,and I don't think could have managed without as his sum was much larger,i don't want to see the amount swallowed up by fees .No offence to IFAs on here but with straight forward pensions I would rather do all the research myself.Hubbys wasn't owing to his health problems .


I will certainly find out about the final bonus but I seem to remember being given the option to transfer last year and I don't think it was any less for doing so.Personally I would rather have an income from it.We have capital and I am probably going to use that to but back years for when I do retire next year(whether I defer depends on how things are at the time)

Froglet

jamesd wrote: »

Just defer the state pension once you can. There's no credible possibility of annuity rates almost doubling to beat what you can get from deferring. But....
It's worth it. They are a better deal than your husband is getting from his state pension deferral and even more better than your own deferral deal.
That's a great deal also, anyone aged between 55 and 75 can do it though only those with available personal allowance will get the maximum £720 a year benefit. If you lack the cash but have credit it's such a good deal that it's worth borrowing to pay the money in then taking it out again once the tax relief has been applied. Or sooner if the borrowing has an interest cost and he scheme lets you take it out in chunks, as most do. A one chunk scheme that makes this easy and has no charges that matter for this is Virgin's but there are plenty of others. Anyone who does this will have their annual allowance for pension contributions reduced to £10k a year and that may matter or those who are still working.

In priority/benefit order these options are:

1. the repeated pension contribution then withdrawing to get up to £720 of extra income a year.
2. buying past years.
3. state pension deferral.

If any are unaffordable then something like an equity release mortgage is likely to be a good deal to get the job done if that's what it takes.

Thank you very much for all your advice.i am definitely going to look into buying back a few more years,but I don't need to cash in the small pension from Aviva to do so.I will also up the amount to L and G because I may withdraw that next year or the year after.I think I need to do some working out on paper or the computer about the best option .I hadn't realised just what a good deal the suggestions you make,are.

Froglet

I have just upped my contribution to Legal and General,but really have no idea if I should be changing the funds to a cash based fund,or whether I should just change the proportion of these 4 funds.


Fund Units held (Unit price)


L&G Index Linked Gilt Fund 7,183.890 (285.60 )
L&G Property Fund123.846 (299.80)
L&G Distribution Fund2,867.864 (253.90)
L&G Managed Fund2,213.162 (233.30)



I know I am not allowed to ask for specific advice but you have all been so helpful,I just wondered what you thought.Please tell me if you can't advise.


I may well be converting the pension to an annuity next year so need to be sure the last year is in the right fund.I did ask L and G for help last year but they confused me with a lot of what they said so I just need some pointers please.

kidmugsy

Froglet wrote: »

I may well be converting the pension to an annuity next year

Doesn't the arithmetic in comment #20 persuade you that you shouldn't take an annuity, but that you should drawdown from the two pensions to use the money more effectively?

I'm not saying "never buy an annuity" but I am doubtful of the wisdom of your buying an annuity so soon in life. If you were 75 then it might be a different matter.