Pension losses

Albermarle

Freedom100 said:

Hi my intention was to buy a 5yr annuity May 2023 which would last till my state pension age of 67.It seems a bit of a stretch for my DC to make up the loss in such a short time frame in the present market .My understanding of transfer value of final salary pension was it was a formula base on your annual quote so can't understand why it dropped with stock market thanks for helping.

For a DC pension, if you are planning to buy an annuity in the next couple of years, the usual recommendation is to move a lot of the pension into cash/very low risk funds . This is to avoid a sudden drop not long before the annuity is purchased, which is what has happened to you unfortunately . Although it might recover in the next 12 months, it could just as easily drop further.
Have you considered drawing down the pension/leaving it invested  over the 5 years rather than an annuity ?

Transfer values for DB pensions are a complex calculation, and more linked to returns from gilts than the stock market. 

Freedom100

Hi thanks for that considered draw down but my understanding is it would still be invested so could become depleted from both sides .l choose annuity for guarantee return over this term . thanks.

Sunnylifeover50plan

Freedom100 said:

Hi thanks for that considered draw down but my understanding is it would still be invested so could become depleted from both sides .l choose annuity for guarantee return over this term . thanks.

what are the pricings for a 5yr annuity? How does it work?

Sea_Shell

Is your retirement plan one you've decided on for yourself or have you consulted with (and been guided by) an IFA?

How long ago did you formulate your plan?   Have you been working towards this plan for many years?

dunstonh

Sunnylifeover50plan said:

Freedom100 said:

Hi thanks for that considered draw down but my understanding is it would still be invested so could become depleted from both sides .l choose annuity for guarantee return over this term . thanks.

what are the pricings for a 5yr annuity? How does it work?

Hardly anyone buys a 5 year annuity.  Usually commercially unviable unless you really really really want it.  Why do you want one?

Freedom100

Hi the 5yr plan annuity was to give me a fixed income till I reach my state pension age.l have a final salary I understand about the benefits of this but the biggest drawback is if you die that money is lost . thanks for everyone's help.

dunstonh

Freedom100 said:

Hi the 5yr plan annuity was to give me a fixed income till I reach my state pension age.l have a final salary I understand about the benefits of this but the biggest drawback is if you die that money is lost . thanks for everyone's help.

Only if you purchase an annuity without death benefits.

Why are you not considering drawdown?  Whilst a fixed rate annuity is the ideal exam answer when you consider commercial issues, the reality is that drawdown will probably be more viable.

Sunnylifeover50plan

dunstonh said:

Sunnylifeover50plan said:

Freedom100 said:

Hi thanks for that considered draw down but my understanding is it would still be invested so could become depleted from both sides .l choose annuity for guarantee return over this term . thanks.

what are the pricings for a 5yr annuity? How does it work?

Hardly anyone buys a 5 year annuity.  Usually commercially unviable unless you really really really want it.  Why do you want one?

I don't want one but was interested in why the OP did.

Freedom100

Hi my understanding of the drawdown is that the fund is invested and you draw off that .My concerns would be a crisis in the market could see the fund depleted while you're still drawing leaving me short .My concerns remaining funds after death were related to my final salary  thanks.