Annuity or drawdown

xylophone

I wonder would it be worth deferring your state pension, transferring your SIPP and two PPs to HL, taking 25% tax free of the total for your house improvements, ( do as much as possible now to "future proof" the property ) and then drawing down the balance tax free (using your personal allowance) for as long as it lasts?

You are aware that even with no earned income, it is possible to contribute £2880 per tax year to a pension and receive tax relief of £720?

ramb

And if stopped the state pension for 5 years, it will grow by 10.2% or 5.8% , for 5 years?

dunstonh

Canada life comes out as top qoute on Compare annuities - Money Advice Service website.

You dont rely on that. It is a basic guide using default pricing and full commission. It doesnt take into account economies of scale pricing that IFAs get or that IFAs are usually cheaper than DIY commission deals when the fund is above £25k.

I meant 10 year guaranteed life annuity,

Why 10 years? The pension freedom changes also changed legislation on annuities to allow them to have far more options now. You can get 20 or 30 years or lifetime now.

Take note of the state pension comments. As others have covered that, I am just focusing on the annuity side rather than repeat.

Linton

ramb wrote: »

Is that mean I should stop taking state pension for 5 years and take a drawdown by utting both pots in sipp (After taking out TFC). The drawdown should finish in 5 years?

Basically yes, Just using the entire Abbey £52.5K after the tax free lump sum should be sufficient, though it's a bit less than 5 years if you want to ensure your income remains constant befiore and after the deferral ends.

Linton

ramb wrote: »

And if stopped the state pension for 5 years, it will grow by 10.2% or 5.8% , for 5 years?

10.4% because you reached state pension age before April 2016. If you were a year and a bit younger it would be 5.8%! And it seems your wife could do the same thing if she meets the criterion. Perhaps a use for your other pension.

PS its 10.4% X 5 years - simple interest, not compounded.

ramb

Thanks, I think I will first phone up stae pension office and enquire about differing the pension even though I have already started taking it. Also have a chat with Pensionwise uk.
Thanks for all the suggestions about differing state pension and in the meanwhile, do a drawdown by putting in a sipp(after taking out all the TFC). Seems to be a good way of doing it, while using the £11k taxfree allowance every year.

jamesd

Yes, that's the way to go.

You can do more than five years but as you do it for longer it increasingly becomes about keeping income up if you live a long life - the longevity insurance value - with less chance of breaking even if you don't. I suggest up to ten years but five is a good stopping point.

kidmugsy

Here's a wrinkle. Your personal pensions will pass outside your estate to a named beneficiary when you die (you have completed the form nominating your wife, haven't you?). If your wife dies before you, you could then nominate a children, grandchildren, or whomever, instead. So there's a case for your withdrawing income from the pensions only up to the tax-free limit, and generating any other income you need by running down your share portfolio of about £40k, and later your share ISA worth around £140k.

Worth a thought.

ramb

Is that mean I take a life annuity from Abbey Life pot(-TFC) and say leave Equitable pension going as it can pass outside the estate to my wife or afterwards to my dauhter or to her son?
No I haven't filled the nomination form. Is it to be done for Equitable? I will phone them about this. No point in doing for Abbey Life if I take out a annuity from that pension fund.

kidmugsy

ramb wrote: »

Is that mean I take a life annuity from Abbey Life pot(-TFC) and say leave Equitable pension going as it can pass outside the estate to my wife or afterwards to my dauhter or to her son?

Yes. And as I understand it, if it does go to your wife and she doesn't use it then it can pass down the family after her death, outside her estate.

ramb wrote: »

No I haven't filled the nomination form. Is it to be done for Equitable?

Yes.


Is there a particular reason for taking the annuity from Abbey Life at the tender age of 67, rather than leaving it be? A guaranteed annuity rate, for instance?