Nervous Retiree

choi

Having spoken to another IFA I am still looking at going down the annuity route for my pension pot

Favourite two options now look like

Option A

£250k pot
Monthly in arrears
Single Income
100% Value Protection
Increase with RPI

Giving £7k per year

Option B

£250k pot
Monthly in arrears
Joint Income 50%
No Protection
Increase with RPI

Giving £7.1k per year

Which of these options would be best for my wife who is 6 years younger than me

I would really appreciate any help you can offer

Silvertabby

choi wrote: »

Having spoken to another IFA I am still looking at going down the annuity route for my pension pot

Favourite two options now look like

Option A

£250k pot
Monthly in arrears
Single Income
100% Value Protection
Increase with RPI

Giving £7k per year

Option B

£250k pot
Monthly in arrears
Joint Income 50%
No Protection
Increase with RPI

Giving £7.1k per year

Which of these options would be best for my wife who is 6 years younger than me

I would really appreciate any help you can offer

It's the pensions magic question - when will you die and when will your wife die.

dunstonh

Having spoken to another IFA I am still looking at going down the annuity route for my pension pot

noted....

Which of these options would be best for my wife who is 6 years younger than me

I would really appreciate any help you can offer

And what does the professional adviser that you are paying for say is best for you?

choi

dunstonh wrote: »

noted....




And what does the professional adviser that you are paying for say is best for you?

He offered a different annuity option which frankly I do not like

I am asking for an opinion from people on this forum on the option I posted earlier this evening

AnotherJoe

Why not post the one you dont like in case people point out an upside to that, that you have missed, or can confirm your thought is correct

dunstonh

choi wrote: »

He offered a different annuity option which frankly I do not like

I am asking for an opinion from people on this forum on the option I posted earlier this evening

Why dont you like it?
What did the adviser say when you told him you didnt like it?

People on this forum have a fraction of the information available to them compared to this adviser. So, it helps to know why it was recommended and why you didnt like it and the counter arguments to your reason.

Half the threads in this section come from people not understanding something and if we just answered them without digging for more info, we would not be helping.

choi

dunstonh wrote: »

Why dont you like it?
What did the adviser say when you told him you didnt like it?

People on this forum have a fraction of the information available to them compared to this adviser. So, it helps to know why it was recommended and why you didnt like it and the counter arguments to your reason.

Half the threads in this section come from people not understanding something and if we just answered them without digging for more info, we would not be helping.

I was offered the following annuity option

Two separate annuities
Number 1
Level Income at £7000.00 pa
No escalation
100% Spouse Benefit
10 Year Guarantee
Number 2
RPI Escalation
Starting Income £2,000.00 pa
100% Spouse Benefit
10 Year Guarantee

My concern was that the larger Annuity has no protection against inflation going forwards

Id really appreciate your comments

dunstonh

My concern was that the larger Annuity has no protection against inflation going forwards

The problem is that that the insurer will price to aim to pay out effectively the same amount over the period of life expectancy. I havent run your figures but something around 23 years is ballpark. If we had run away inflation, then you may gain. if we have low inflation, then you lose.

As your state pensions increase annually and generally, people spend less as they get older, the level pension is more effective for most people.

It can also depend on your other income earning assets e.g if you have £x in S&S ISAs that are not being used for income thent they can always come into play later. Or if you make use of the annual pension allowance of £3600 until age 74, you can build segments of money to draw income from later.

choi

Thanks dunstohn

I am moving towards this option

Option B

£250k pot
Monthly in arrears
Joint Income 50%
No Protection
Increase with RPI

Giving £7.1k per year

It pays a bit less but gives me peace of mind [an expensive item[
And provides some income for my wife after I die

I must say I have found this whole process incredibly stressful

westv

dunstonh wrote: »

The problem is that that the insurer will price to aim to pay out effectively the same amount over the period of life expectancy. I havent run your figures but something around 23 years is ballpark. If we had run away inflation, then you may gain. if we have low inflation, then you lose.

Which shows that even index linked annuities aren't risk free.