Annuities

muswellblue

Hi, 

I have a question on annuities. When you want to transfer your pension to an annuity are you taxed on the pension pot before you put it in to an annuity? and then taxed again when you take income from the annuity? In effect getting taxed twice?

thanks for any advice

Dazed_and_C0nfused

No, buying an annuity crystallises your pension so only time tax would be a factor at that point would be if you had exceeded the lifetime allowance.

https://www.gov.uk/tax-on-your-private-pension/lifetime-allowance

The tax due on the annuity will depend on your other taxable income each tax year the annuity is paid in.

MEM62

The real question is why would you want to buy an annuity?  They are not the most appropriate solution in many cases.  

Linton

MEM62 said:

The real question is why would you want to buy an annuity?  They are not the most appropriate solution in many cases.  

...... and the best one in others.

Kim1965

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

Thrugelmir

Kim1965 said:

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

In a few years will be the hot topic on these forums. 

dunstonh

Kim1965 said:

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

Yes.  They will likely begin to outsell drawdown again.

westv

dunstonh said:

Kim1965 said:

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

Yes.  They will likely begin to outsell drawdown again.

I'm sure I read that most sales in the past were level annuities. Does make me wonder if a higher income amount but with high inflation is any better or worse than a lower income and very low inflation. 

sheslookinhot

westv said:

dunstonh said:

Kim1965 said:

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

Yes.  They will likely begin to outsell drawdown again.

I'm sure I read that most sales in the past were level annuities. Does make me wonder if a higher income amount but with high inflation is any better or worse than a lower income and very low inflation. 

I guess the higher income affords you discretion in your purchases.

westv

sheslookinhot said:

westv said:

dunstonh said:

Kim1965 said:

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

Yes.  They will likely begin to outsell drawdown again.

I'm sure I read that most sales in the past were level annuities. Does make me wonder if a higher income amount but with high inflation is any better or worse than a lower income and very low inflation. 

I guess the higher income affords you discretion in your purchases.

But the quicker your spending power erodes over time.

Albermarle

westv said:

dunstonh said:

Kim1965 said:

Can anyone see anniities making a comeback? I believe they are mot as hopeless now. 

Yes.  They will likely begin to outsell drawdown again.

I'm sure I read that most sales in the past were level annuities. Does make me wonder if a higher income amount but with high inflation is any better or worse than a lower income and very low inflation. 

Your average person probably does not really understand the long term effects of inflation, and just sees the short term benefit of more immediate income.