Lifetime annuity vs fixed term annuity

Tcquins

Could be a whole range of options and costs with an IFA, both lower and higher.

If you don’t need the money right now, there’s no need to draw it.

Unwrapped investments—> ISAs —>Pension is how it should generally be drawn unless you know you’re definitely going to need to draw heavily on the pension later and pay higher tax.

Taking the tax free cash when you’ve got 200k in ISAs that are fixed rate (cash?) doesn’t make a lot of sense. Especially if you’re pension is invested at something that’s likely to grow at a better rate than your isa funds over time.

Seems like you’ve got a lot of options (all good ones, but some better than others).

Hopefully your IFA can flesh things out for you.

dunstonh

Franz5 wrote: »

So I can espect charges to be between 1.2 to 1.3% - do you think?

That is your ballpark target. I say ballpark as you generally find that charges are higher at the higher end of the risk scale and lower at the lower end. For a reference point, we would be between 1.1 and 1.5 using the same funds but with different weightings to reflect the risk. And that should be the bottom line (e.g. platform, fund and adviser). If you came out with 1.6% i would not be concerned. If you went above 2% I would be.

There will be plenty out that at 2% or above. Probably more than those around the 1.2-1.5% mark. You may need to phone around a bit.

Franz5

I’m waiting for some figures but another IFA has indicated his initial suggested Pruplan.
I haven’t asked the Pru but I assume it’s best to go through an IFA rather than trying to go “direct” to the Pru. I’m thinking if I did then the Pru would apply an FA charge anyway.
I also read somewhere that Aviva have some ready made products but I can’t find anything on their web site.

Franz5

It looks like the Prufund option will cost approx. £3K to set up including the advice and thereafter 1.6% annual review fees. I did naively think I could reduce these costs by going direct to the Pru but very quickly found they had costs and I assume they wouldn’t exactly be unbiased when it came to reviews.
Just thinking out the box here - after the Prufund is set up and the administration charges are approx. 1.1%, is an annual review really worth it if the growth is around the anticipated 5% mark?

dunstonh

It looks like the Prufund option will cost approx. £3K to set up including the advice and thereafter 1.6% annual review fees

That ongoing review charge is high. The initial charge is ballpark but you could get better.

nd I assume they wouldn’t exactly be unbiased when it came to reviews.

Pru can only sell their own product. They have total bias to their own product.

is an annual review really worth it if the growth is around the anticipated 5% mark?

Depends on how much they are going to charge you for drawdown events and your frequency of making changes/withdrawals.

bostonerimus

Franz5 wrote: »

It looks like the Prufund option will cost approx. £3K to set up including the advice and thereafter 1.6% annual review fees. I did naively think I could reduce these costs by going direct to the Pru but very quickly found they had costs and I assume they wouldn’t exactly be unbiased when it came to reviews.
Just thinking out the box here - after the Prufund is set up and the administration charges are approx. 1.1%, is an annual review really worth it if the growth is around the anticipated 5% mark?

1.6% for an annual review that I'm sure you could do perfectly well yourself with a bit of research sounds expensive to me. I'm always amazed that people seem to be ok paying other people large percentages of their drawdown income for what seems to be me to be very little. I certainly would not want to give 25% of my annual income up in fees.

dunstonh

I'm always amazed that people seem to be ok paying other people large percentages of their drawdown income for what seems to be me to be very little.

A lot of people like having an adviser that knows what they are after and what their objectives are and the comfort discussions etc.

However, I am not sure what value getting a different Pru sales rep every time is going to add. As they wont know the person, have no alternatives to compare against (so if something better comes along, Pru wont tell them as they are not allowed to) and tied reps are heavily restricted in what they can and cannot say and do.

Franz5

Just to clarify - the annual plan charge is 1.1 and the IFA is .5%. So I’m assuming the Pru would be similar as it appears you can’t get around the plan charge. For me I think the point is that once it’s in this “low risk and consistent fund”, what are the benefits of the “external review” - unless this is method to receive an income e.g. if I need to draw monies - is this via the IFA or could the Pru do this. Who sorts the tax?
I’m due to have a visit from another IFA so there’s many questions I can ask. I’m also aware of a previous comment made by someone regarding - ‘asking a barber if I need a haircut’.
At present I’m in favour of using an IFA especially after reading reviews for Pensionbee and Fidelity.
This is a complex subject which needs careful consideration which a 40 minute discussion with Pensionwise doesn’t really cover all the dangers.