Fixed Term Annuity

choi

Looking at this option

£250k pot
No Tax free

Joint Life
50% Spouse
Term 5 Years
Level
No Guarantee Period
Paid Monthly in arrears
100% Value Protection

Total £15,000.00 pa

Guaranteed Maturity Amount £187,065.00

What are the downsides other than the following

Inflation will reduce value of annual payment
Inflation will reduce value of GMA

May not have option to get a good annuity in 5 years time
Ditto re Drawdown

Inflation may go really high after Brexit

Is this a risky option

Brynsam

All things carry risks. Just depends which ones worry you the most and which you can live with.

bostonerimus

You're getting 1% return. Ignoring tax you'd be better off taking 75k out of your pot and putting what's left in a 5 year savings bond getting 2% a year.

shinytop

Guaranteed Maturity Amount £187,065.00

is this taxable?

Malthusian

shinytop wrote: »

is this taxable?

No. The guaranteed maturity value from a fixed term annuity remains within the pension wrapper. Normally you would transfer it to another pension product. It would only be taxable if you cashed it in.

choi wrote: »

What are the downsides other than the following

Not important as based on previous behaviour you're probably not going to buy it.

You can spend every week of 2019 posting a retirement income product and asking why you shouldn't buy it and you still won't be any closer to actually doing anything.

At this point a lot of IFAs would have given up.

What do you actually want? It's not me that needs to ask this question but you. Every option has upsides and downsides. It is impossible to pick the "right" one if you don't know what your priorities are. You don't, which is why you've spent two years not being able to make a decision, at significant cost to yourself (namely from leaving your pension fund rotting in cash for two years).

When you don't know what you want every option is the wrong one, as if you did make the mistake of taking one, you will only see the downsides of your decision. If you buy an annuity you will worry that it was the wrong time. If you go into drawdown you will worry about falls in value. For an annuity to be the right decision you need to know that you want security of income and therefore the loss of flexibility is totally worth it. For drawdown to be the right decision you need to know that you want above-inflation capital growth and flexibility and the occasional temporary 25%+ plummet in value is totally worth it. If you don't know what you want and why you want it then there is no right decision, only being adrift in a sea of stuff to worry about.

choi

Malthusian wrote: »

No. The guaranteed maturity value from a fixed term annuity remains within the pension wrapper. Normally you would transfer it to another pension product. It would only be taxable if you cashed it in.



Not important as based on previous behaviour you're probably not going to buy it.

You can spend every week of 2019 posting a retirement income product and asking why you shouldn't buy it and you still won't be any closer to actually doing anything.

At this point a lot of IFAs would have given up.

What do you actually want? It's not me that needs to ask this question but you. Every option has upsides and downsides. It is impossible to pick the "right" one if you don't know what your priorities are. You don't, which is why you've spent two years not being able to make a decision, at significant cost to yourself (namely from leaving your pension fund rotting in cash for two years).

When you don't know what you want every option is the wrong one, as if you did make the mistake of taking one, you will only see the downsides of your decision. If you buy an annuity you will worry that it was the wrong time. If you go into drawdown you will worry about falls in value. For an annuity to be the right decision you need to know that you want security of income and therefore the loss of flexibility is totally worth it. For drawdown to be the right decision you need to know that you want above-inflation capital growth and flexibility and the occasional temporary 25%+ plummet in value is totally worth it. If you don't know what you want and why you want it then there is no right decision, only being adrift in a sea of stuff to worry about.

That was harsh but honest
So thank you sincerely

I initially chose an annuity option in order to ensure relative peace of mind at the expense of loss of flexibility and possible higher income

I did look into draw down but three things put me off
Risk
Cost My IFA quoted 1.35% pa for his and the other costs This seemed very high
Return at my cautious investor status

I would sincerely love it if someone can point me in the right direction and tell me the best way to achieve the following

Move my Pension Pot out of cash costing me 1.35% pa

Advise me on a cost to set up a draw down paying circa 4% pa after fees

All I want is to achieve a base line of £350 per week
from state pension annuity/drawdown dipping into my savings