BUYING a pension off the shelf

Charlton_King

Almost all the information I can find online talks in terms of 'your pension pot' and what to do with it... i.e. it seems to be assumed that this is an amount you have saved up under some dedicated scheme calling itself a 'pension'.

What I want to know is whether I can approach providers like Aviva etc. with a lump sum amount from my general savings to buy a pension.

Sorry if this seems a naive question but honestly I don't seem able to get a straight answer to it from online sources.

marlot

Charlton_King wrote: »

What I want to know is whether I can approach providers like Aviva etc. with a lump sum amount from my general savings to buy a pension.

I think what you're really trying to ask is whether you can buy an annuity, funding it from a general savings account.

Is that right?

dunstonh

What I want to know is whether I can approach providers like Aviva etc. with a lump sum amount from my general savings to buy a pension.

A pension or an annuity or income drawdown?

A pension is what you use during the accumulation stage.. i.e. building up your fund for later life. You add into that regularly or ad-hoc.

In the decumulation stage, you either use income drawdown (which is within certain types of pension) or an annuity (which is not a pension but you used your pension money to buy it).

The word "pension" covers a range of things and can mean different things in different scenarios.

bob_a_builder

This crowd will get you some quotes
https://www.sharingpensions.co.uk/annuity_quote_standard.htm

and the form has a check box for
"Please let us know the source of your fund for the annuity:"
Cash fund or Pension fund

Not sure why it makes a difference ?

AnotherJoe

CK, it depends what you actually want.
Do you want to accumulate money?
Do you wish to have an income from your money?
Something else?

Also, how old are you and are you working?

System

The question I think you are really asking is whether, having for some years not contributed to a pension, but instead built up a "pot" by other means, can you swap it into a real pension as if you had been contributing all the time?

The basic answer is no, but as others have said, you can use it to purchase an annuity, which is one of the options that would have been open to you if you had had a "real" pension. So if that is what you want, then yes, you can catch up with the position you could have been in.

To put it into a real pension you would have to follow the rules and make contributions all over again, funding them with your savings pot. If you have earned income of more than £40,000 pa then you can pay all of that into a pension, so could transfer your entire pot over a number of years.
If you had been a member of any pension scheme for the past three years could carry forward 3 X £40,000 of unused allowance, which would speed up the process, if you had sufficient earned income to cover it.

The new pension freedoms allow someone to withdraw large sums or their entire pension pot (subject to age, tax, etc) but there is no converse provision for paying money in. To that extent the Chancellor's statement that pension pots can now be operated like a bank account was not true - you can withdraw but you cannot pay in, only contribute.

GunJack

bob_a_builder wrote: »

This crowd will get you some quotes
https://www.sharingpensions.co.uk/annuity_quote_standard.htm

and the form has a check box for
"Please let us know the source of your fund for the annuity:"
Cash fund or Pension fund

Not sure why it makes a difference ?

by the look of it, further down, if it's a pension fund it allows you to specify the PCLS

Charlton_King

Sorry folks. Have not been able to reply owing to illness.

I'm not sure how much simpler I can state this but let's have a try:

1. I want to receive an amount of money each month during my retirement, quite separate from any work based or state provided pension. If you don't want to call it a pension, feel free not to do so. I shall continue calling it that.

2. To achieve this, I am willing to pay over a lump sum taken from my savings.

Can I buy this 'situation'? Use whatever terms please you.

Peter314

Yes, you can buy an annuity. Worth talking to an IFA before you do, as they claim to be able to get better rates than are available to the general public.

AlanP_2

You can buy it - an Annuity as mentioned above. Income for life, amount paid depends on age, health, life expectancy, increasing with inflation or not, spouse at 50% if you die etc.

A site like https://annuityadvicecentre.co.uk/ will give you an idea of what income you could get. I have seen comments that an IFA can often beat public rates so worth checking that out.

AnotherJoe

First of all call it an annuity. That’s what it is, that’s what the paperwork will say, that’s what you’ll look at when you are making comparisons, that’s what the people you speak to will call it.

Second, how old are you, much are your savings and how much money are you needing / expecting them to provide, for how long ?

Edit: What Dunston wrote makes sense, what you want is an income. There are many ways of providing that dependent upon your circumstances, hence my Q’s above. An annuity is one way of providing that, there are others, which are likely to be better.