Purchased Life Annuity

Mrs_pbradley936

I asked on another thread if it was possible to sell a property and provide the mortgage. I want an income which I currently get via rent from a flat owned outright but the changes to rental legislation are making this less attractive.

Anyway I discovered PLAs but know nothing about them.

We currently have good pensions and the usual ISAs plus a bit with NS&I but I just had a look and the rate from them is terrible. I did not want to sell the flat (£250K less Capital Gains) and put the money there.

Would a PLA be suitable?

lisyloo

Why not just sell the property and drawdown the capital?
An annuity will give you a guarantee but at a cost.

Mrs_pbradley936

lisyloo wrote: »

Why not just sell the property and drawdown the capital?
An annuity will give you a guarantee but at a cost.

Where would you put the capital sum to do that?

Brynsam

A PLA could indeed be attractive, not least because of the favourable tax treatment. Unlike an annuity bought with money coming directly from a pension scheme, PLAs are taxed on the basis that part of each payment is a return of capital rather than being 'all income'.

Whether your priority is an income for a fixed length of time, or open-ended ('for life'), they are certainly worth investigating.

lisyloo

Mrs_pbradley936 wrote: »

Where would you put the capital sum to do that?

Anywhere you want although be aware of £85k FCC’s limit.

What exactly is it your after?
Do you want a guaranteed income for life? And you’re prepared to pay for that?
It’s not clear to me what you want, but you can cleared put it somewhere easy access and take it whenever you want.

What’s the priority?

Return?
Guaranteed income?
Safety of capital?

dunstonh

Generically, PLAs could fit the bill. They make a frequent exam answer when discussing generic scenarios. In the real world, commercial pricing usually curtails the option.

AnotherJoe

How old are you Mrs P?

Mrs_pbradley936

lisyloo wrote: »

Anywhere you want although be aware of £85k FCC’s limit.

What exactly is it your after?
Do you want a guaranteed income for life? And you’re prepared to pay for that?
It’s not clear to me what you want, but you can cleared put it somewhere easy access and take it whenever you want.

What’s the priority?

Return?
Guaranteed income?
Safety of capital?

I would like more income and for life my husband and I are retired and this flat is becoming a nuisance now that you have to comply with lots of new regulations. Some Councils are bringing out registration schemes, plus you need energy certificates and you can no longer write off 10% as you used to be able to.

We have a paid for house, and a decent income from pensions already and it is only this new legislation that is making the flat a chore to sort out.

Mrs_pbradley936

AnotherJoe wrote: »

How old are you Mrs P?

71 and my husband is 74.

AnotherJoe

Ok well you might get decent rates on a PLA then. Any health issues either of you have will also provide better rates.
Just be aware all that money is gone once you've bought it. It's not really any different to putting your money into investments or even just an interest paying account and drawing it down, except that you don't have to bother with the managing of that.
OTOH you may find it pays out much less than you think it "should" . Best advice I've seen here is go via an IFA or broker to buy it rather than just look at rates online.