Timed Annuity

Chapter73

Hello

I have been reading about timed annuities on the money advice service website and they look quite interesting...if not a little puzzling

I have mainly learnt that i know nothing!!!

I ran some practice figures through their calculator just to see.
In one instance i put in 200k fund (supposing i had taken my tax free lump sum first)
It showed 711 a month payable for 20 years (170,780 over the 20 years) with a return of 150,000 which i would leave for my wife
Now, to my mind , they keep the 200 k i put in and pay back in total including the income of 320,780.
So an overall return /profit of 120,780 over 20 years on 200k
This is 6039 a year on 200k so equivalent to 3per cent if i am not mistaken

So firstly....have i got this right
Secondly, if i have got this right and i die after year 10 say, will my wife have to wait another 10years before she gets the 200k back?
Thirdly, i am assuming the annual payments would stop if i die early
And last and not least.., would the 50k returned be taxed at marginal rate, or would it be classed as a pension and my wife be able to use it as such?

Thankyou

Albermarle

I am guessing a bit but I suspect it is related to the fact that £711 a month paid now , will in real terms not be worth £711 in 20 years time due to inflation . So that £320 K is not = to £320K in todays money .
For example the final return sum of £150 K would in real terms be worth a lot less in 20 years time.

dunstonh

I have been reading about timed annuities on the money advice service website and they look quite interesting...if not a little puzzling

Timed as in fixed term? (not heard them referred to as timed before)

Secondly, if i have got this right and i die after year 10 say, will my wife have to wait another 10years before she gets the 200k back?

Depends on the terms of the death benefits you choose to include.

Thirdly, i am assuming the annual payments would stop if i die early

Depends on the terms of the death benefits you choose to include.

And last and not least.., would the 50k returned be taxed at marginal rate, or would it be classed as a pension and my wife be able to use it as such?

Depends on the age that you die (before or after 75) and what your wife does with the fund once she gets it transferred to her name.

Brynsam

Have you actually read all the information on the Money Advice website? It seems to answer most of your questions: https://www.moneyadviceservice.org.uk/en/articles/using-your-pension-pot-to-buy-a-lifetime-annuity

I think perhaps you mean 'lifetime' rather than 'timed', perhaps?