Retirement Stop Gap

dunstonh

Slinky wrote: »

I tried this and couldn't get a single quote for a 10 year annuity whatever data I put in.

Fixed term annuities are still largely retailed via IFAs and not the DIY market.

Twoplus

I managed to get a quote from the link provided after a second visit. It will not give you a quote unless you are 55 so I made myself 5 years older.
The returns were not that good, think they would be better if I moved to central Blackpool as unfortunately life expectancy there is poor.

OldMusicGuy

Slinky wrote: »

I tried this and couldn't get a single quote for a 10 year annuity whatever data I put in.

I was able to put in any term from 5 to 40 years. Here's what I got for 10 years:

Quote 1 - How much income?

Your income will be:
£899
Monthly
£10,796
Yearly
£107,960
Over the term

Your choices
£100,000 pension pot
10 year term
Cash at end of term £0
Paid quarterly in arrears
Income starts at age 61

(it then lists the providers)

westv

Twoplus wrote: »

I managed to get a quote from the link provided after a second visit. It will not give you a quote unless you are 55 so I made myself 5 years older.
.

Obvious really seeing as you can't access a pension until 55

tafer2uk

Thanks for the replies guys but that was partly my point. I won't have an annuity given I have an NHS pension. I wanted to know if there were products I could pay into for the next 15 years similar to a pension for a fixed income for 7 years to bridge the gap. I'm guessing my options are going to be savings based options.

Sea_Shell

I guess the two main points would be:

1. How much annual income do you want/need for this 7 year period and
2. How much money can you throw at this for the next 15 years?

In simple terms, if you want say, £20k p.a, for 7 years then that's going to require a pot of £140,000 (ignoring growth/interest/inflation for now). If you have 15 years to acquire this pot, then that's going to need approx. £780 pm saved/invested during that time.

The trick is to find a provider/scheme that can aquire that pot for less than £780 pm.

Sea_Shell

OldMusicGuy wrote: »

I was able to put in any term from 5 to 40 years. Here's what I got for 10 years:

Quote 1 - How much income?

Your income will be:
£899
Monthly
£10,796
Yearly
£107,960
Over the term

Your choices
£100,000 pension pot
10 year term
Cash at end of term £0
Paid quarterly in arrears
Income starts at age 61

(it then lists the providers)

How does that work? At what age do you have to transfer in your £100k pot? If 55, do they have your money for 6 years, and then start paying out? There's a pretty good chance of living until 71, so how do they give nearly a 8% return on your investment? Am I missing something obvious here?

Twoplus

You are not getting 8% return, don't forget this is over a 10 year period. Also while most people who are 60 will make it to 70 there is a small percentage who will not.

Twoplus

Taker2uk
There is no reason why you can't start a personal pension along side your NHS pension. I am in a similar position as you and have started am AVC with Prudential. You have a lot of flexibility with pensions now, so you could buy a fixed term annuity at the end of the 15 years or withdraw what you need each year from the pot until there is none left.
Have a look at the link provided by Louloubelle.
Do you know you can take your 2015 NHS pension at 60 but at a reduced rate.

OldMusicGuy

Sea_Shell wrote: »

How does that work? At what age do you have to transfer in your £100k pot? If 55, do they have your money for 6 years, and then start paying out? There's a pretty good chance of living until 71, so how do they give nearly a 8% return on your investment? Am I missing something obvious here?

The way it works is that you take £100K out of your pension pot when you want the annuity to start. You don't give them the money now and start the annuity later. So like Twoplus said, you could start a personal pension now, build up the funds in that and then convert that into an annuity at 60, or whatever age you want after 55. Don't forget that contributions are tax free, so you get 20% added by the government to whatever you put in.

You won't know for sure what the annuity rates will be in the future so the numbers you will get know will only give you an idea of what you might get in 5 plus years time. However, as annuity rates have been at all time lows, it's unlikely the rates will be significantly lower than they are now in the future.

And as Twoplus also said, the near 8% is over 10 years so it's not a very good return.