Gar %

blazebuster

My pension pot of just over £68,000 matures in a couple of weeks. Have a GAR of around 8%.
Policy was originally with the Royal National Fund for Nurses which is now adminstered by LV.
Options being offered are £17,000 lump sum & £300 a month or no lump sum and £400 a month.
Both level payments guaranteed for 5 years. Single life no increases.
Question is whether to take lump sum.
Does the LV deal look OK, or do you think i could do better.

wjr4

Your figures equal 7.06% annuity rate. Unless you are really unwell/old, you will not get that anywhere else.

nigelbb

In simple terms you will be in profit after about 14 years by taking £400 per month instead of the lump sum & £100 less per month.

JoeCrystal

Considering that the annuity rate is 4.1% for 55 years old, 4.5% for 60 years old and 5.3% for 65 years old at the moment, it sounds like it is a pretty good deal. If you have no immediate need for lump sum cash, it would be better to go for £400 per month in this case.

Paul_Herring

Sidebar:

Question for the more knowledgeable..

The GAR is apparently 8%.

The annuity being offered, with no lump sum, at maturity (£400*12/£68k) is 7.06%.

What is the GAR, if not that calculation I've got there?

blazebuster

Who knows if you will still be alive in 14 years time. Also, due to other income i have no immediate need for a lump sum, however the lump sum would be tax free as opposed to paying 20% tax on monthly income. given that the payback would be longer than 14 years. Looks like taking the maximum lump sum would be the best option.

Paul_Herring

however the lump sum would be tax free as opposed to paying 20% tax on monthly income

You don't get taxed on the first £12500 of income (this tax year) - I presume you have other income taking you above that?

blazebuster

Correct O.A.P & final salary company pensions take up all my allowances.