Invested Annuity

logical_song

Hi,

I have a pension pot with Equitable Life, which has the unusual feature that I can apparently take more than the standard 25% tax free, it should be around 40%. However I then have to take the remaining amount as an annuity, no option for drawdown here.
I have received some Annuity quotes on the £33,000 remaining amount and the best one for a level, no guarantee period, no spouse pension is £1629/year.
I was given some information about an Invested Annuity which worked out at £2334 (assuming a 4% performance. It still came out at £1980 on 2% performance).
I can afford to take the risk on this and it definitely looks better, but the agent refused to go ahead with it because there was only one company offering it (Aviva) and others had dropped out of the market (LV and Prudential).
I'm investigating going to Aviva via one of their tied advisers but would welcome any suggestions.

Thanks,
Chris

xylophone

https://www.lv.com/adviser/investment-linked-annuity

Have you tried Canada Life?

Or would a with profits annuity be a possibility?

logical_song

Thanks,

I was told by MyPensionExpert's IFA that LV and the Pru had withdrawn from Invested Annuities. They said that only Aviva were doing them now and that they couldn't offer that to me as they had to offer 'full market'.
Can't say I understood the logic.
Any type of annuity which would allow me to take the 40% tax free first and would beat the best return I've found so far would be worth looking at. I thought that the 'with profits' annuity was sub type of invested annuity, but I'm still learning.

Chris

dunstonh

I was told by MyPensionExpert's IFA that LV and the Pru had withdrawn from Invested Annuities. They said that only Aviva were doing them now and that they couldn't offer that to me as they had to offer 'full market'.

Pru have withdrawn from retail annuities (but not ones through commercial links). There are 5 investment linked annuities still available though IFAs. So, not sure why they are saying only Aviva.

logical_song

Thanks for that.
I phoned LV and they say that they have withdrawn it a few days ago to recalculate, but will return with a new invested annuity. Their website still says that it is on offer.

kidmugsy

A family member of mine has a Pru 'With Profits' annuity. She's happy with it: she was simply not prepared to risk a level annuity - too vulnerable to inflation. Her Pru pension does have a floor amount below which it won't sink even if the Pru's investments do badly. (Or so I believe.)

logical_song

Thanks for that.
From what I've been told the Pru has also withdrawn that product, probably on a temporary basis. I don't need the pension immediately, so will wait for a while to see if they come back.

kidmugsy

Here's another view. You will get an extra 15% of the fund tax-free, thus avoiding (I'll assume) 20% income tax. So that's worth about 3% of the fund. The price of liberating that 3% is having to take an annuity rather than having the flexibility of using drawdown. Does the trade-off suit you?

It very well might, especially if you would welcome an annuity's longevity insurance, and lack of demand on your money-managing skills. (I've seen the latter referred to as "dementia insurance".)

logical_song

Yes, that's basically my thinking.
The standard lifetime annuity rate isn't good but I would have taken the 'Invested Annuity' that I was quoted, if the offer hadn't been withdrawn. It's several hundred more per year and should cover inflation too.
While I leave the money in Equitable it's getting 3.5%pa applied on a daily basis, although there is a risk that Equitable may reduce the 'share of capital distribution' at any time.
There's lots of variables, so I think I'll leave it for now and just keep and eye open for the best deal.