annuity/drawdown mix

SouthCoastBoy

As annuity rates increase is anybody thinking of moving to a split annuity drawdown model? Personally it is something I would consider when I get a little older (65+). I would only be interested in an RPI linked annuity. I'm thinking maybe put £200k into an annuity (will receive around 8k per annum at today's prices) when added to my state pension and my wife's plus her 10k final salary that should be enough to live off. We then have the remainder of the DC as back up.

NedS

I'm not considering an annuity, but I am buying extra DB pension now (CPI uncapped) to achieve the same thing - the aim being for everyday ongoing expenses to be comfortably covered by SP+DB (uncapped CPI) and for the DC pots to cover all the extras (new boiler, car, holidays etc). There is no way I'd want to be 100% DC drawdown.

dunstonh

vAs annuity rates increase is anybody thinking of moving to a split annuity drawdown model?

Having an element of secure income is a known and well-used method.  e.g. covering committed outgoings. With annuity rates looking much better, I would not be surprised to see more use it.

SouthCoastBoy

NedS said:

I'm not considering an annuity, but I am buying extra DB pension now (CPI uncapped) to achieve the same thing - the aim being for everyday ongoing expenses to be comfortably covered by SP+DB (uncapped CPI) and for the DC pots to cover all the extras (new boiler, car, holidays etc). There is no way I'd want to be 100% DC drawdown.

Yes if annuity rates stay where they are or increase over the next 7 years, if I spend 200k on an annuity, we would have approx £3k income from state retirement age, which we could comfortably live off, currently living off between 2k and 2.5k a month. Then have the safety net of the DC pension and savings

SMcGill

I’m beginning to think about using my cash savings to buy an annuity as I have more than I expected due to various unforeseen events. It hasn’t quite hit the point where the maths works, but it’s a lot closer than it was. 

Albermarle

I would only be interested in an RPI linked annuity. I'm thinking maybe put £200k into an annuity (will receive around 8k per annum at today's prices) 

I know annuity rates have increased but this seems quite generous. Is the RPI capped at a certain %? Maybe no spouse pension etc ?

SouthCoastBoy

Albermarle said:

I would only be interested in an RPI linked annuity. I'm thinking maybe put £200k into an annuity (will receive around 8k per annum at today's prices) 

I know annuity rates have increased but this seems quite generous. Is the RPI capped at a certain %? Maybe no spouse pension etc ?

It's single life, figures are from h&l, in my case my wife already has the db equivalent so only I need the annuity, we would still have a substantial dc pot and savings

SouthCoastBoy

Albermarle said:

I would only be interested in an RPI linked annuity. I'm thinking maybe put £200k into an annuity (will receive around 8k per annum at today's prices) 

I know annuity rates have increased but this seems quite generous. Is the RPI capped at a certain %? Maybe no spouse pension etc ?

It's single life, figures are from h&l, in my case my wife already has the db equivalent so only I need the annuity, we would still have a substantial dc pot and savings

https://www.hl.co.uk/retirement/annuities/best-buy-rates