Decision Time

choi

Finally ready to make a decision on what to do with my £250 k pension pot
This is currently sitting in an Aviva Cash Fund and after interest is costing approx 1% pa

I did want to buy an annuity for
50%Spouse
RPI Escalation
100% Protection

This would give me approx £6.6 k pa

My IFA has said go with another option

Put pot into draw down but just leave invested for 5 years
Let it build up
Fees 1.3% in total
Says at my risk profile of 2 it would make 3-5% after fees

I'm meantime use my savings instead of drawing down

Benefits are it would be tax efficient and better for inheritance
And my pot would hopefully grow
I could always buy an annuity in 5 years time
I would be 72 and get a better deal

Is his advice the way to go

There could be bumpy times ahead with Boris and Brexit

Thanks

MovingForwards

You would be better off posting on the pension board.

This one is for debates

MallyGirl

It depends on what scale the risk profile of 2 sits - on a scale of 1 to 3 it would be in the middle but on a scale up to 10 it would be quite low risk. 3-5% is only just covers inflation plus a tiny amount of growth.

shinytop

I know this has been discussed a lot already but even investing in a balanced multi asset fund on HLwould cost you about 0.65% in fees. If you went for one of the cheaper fixed fee alternatives like II that would be more like 0.3%. That's 1% less than your IFA is suggesting, which is significant if growth is only 3-5%.

Marcon

choi wrote: »

My IFA has said go with another option

Is his advice the way to go

There could be bumpy times ahead with Boris and Brexit

Wy would strangers be better placed to 'advise' than your IFA, who has done a full fact find, will have given you a written report explaining his recommendation, and presumably has factored in Brexit etc?

A straw poll based on close to zero information isn't the best way to take a decision.

SonOf

Is his advice the way to go

Statistically, the odds favour the adviser option as being the one used the most. However, there is nowhere near enough information available on your post to say what is best for you. Your IFA would have that information though.

It is worth noting that the charges on the annuity, whilst implicit (i.e. invisible) are likely to be higher than the drawdown option.

I know this has been discussed a lot already but even investing in a balanced multi asset fund on HLwould cost you about 0.65% in fees.

An IFA can get cheaper than that for a balanced multi-asset fund if they felt that was the best option.

Albermarle

The OP has posted similar questions before . He is ultra cautious and has numerous other income sources apart from potential drawdown of the DC pot . Compared to 99% of the population he has nothing to worry about .

Extract from previous thread:

I have personal savings of £200 k
There is a sum of £300 k in the business
I have savings I am able to use for day to day living etc for the time being
I also have a state pension
My wife retires in six years time
She will have a state pension plus a teachers part pension
We own our own home outright
We also own a separate home which gives us about £700 per month rent before taxation
... and am considering a part time job just in case its not enough!!!

wjr4

Are you comfortable losing money if we have a stock market crash? Why are you taking 50% spouse benefits AND 100% value protection?

Audaxer

choi wrote: »

My IFA has said go with another option

Put pot into draw down but just leave invested for 5 years
Let it build up
Fees 1.3% in total
Says at my risk profile of 2 it would make 3-5% after fees

There is no way that your IFA can guarantee that your investment will rise 3-5% per year after fees in a 5 year time frame. As we have had a long bull run over the past 10 years, we could well have a bear market over the next 5 years, and the value of your investment could be lower in 5 years time.

I do agree with investing the money rather than buying an annuity at this time, but a 20 year timeframe is more realistic for saying average growth of 3-5% after fees could be expected.

westv

Audaxer wrote: »

As we have had a long bull run over the past 10 years, we could well have a bear market over the next 5 years, and the value of your investment could be lower in 5 years time.

It was a bit bearish in 2015

Audaxer

westv wrote: »

It was a bit bearish in 2015

Yes, a bit bearish, but I think 2015 and the end of 2018 were classed more as corrections in the long bull market run.