Excellent Annuity Rates

Spivo46

Too much focus on the twilight years and saving money for that time for me. Lets face it, most people are past adventure and happy to sit in front of TV or garden etc at 85+. Enjoy while you can, you earned it. But its all a matter of preference and opinions, which is all good.

ader42

Annuities are rubbish.

£300k for 20 years gives £450k over the term so a 50% return in 20 years if you manage to live that long? 
You’d have to be crazy to accept that, for the risk of losing it all by dieing I’d want at least a 200% return. 

The same site shows that the same annuity with a lump sum payment after 20 years of the original investment amount, e.g. £300k would buy an income of £275k over the same term in addition to a £300k payout.

£100k for a 10 year term only pays out £120k so 20% return over 10 years - still garbage.

Albermarle

ader42 said:

Annuities are rubbish.

£300k for 20 years gives £450k over the term so a 50% return in 20 years if you manage to live that long? 
You’d have to be crazy to accept that, for the risk of losing it all by dieing I’d want at least a 200% return. 

The same site shows that the same annuity with a lump sum payment after 20 years of the original investment amount, e.g. £300k would buy an income of £275k over the same term in addition to a £300k payout.

£100k for a 10 year term only pays out £120k so 20% return over 10 years - still garbage.

I think you are forgetting about inflation. Most annuities have some kind of inflation link, even if it is not 100%

[Deleted User]

ader42 said:

Annuities are rubbish.

£300k for 20 years gives £450k over the term so a 50% return in 20 years if you manage to live that long? 
You’d have to be crazy to accept that, for the risk of losing it all by dieing I’d want at least a 200% return. 

The same site shows that the same annuity with a lump sum payment after 20 years of the original investment amount, e.g. £300k would buy an income of £275k over the same term in addition to a £300k payout.

£100k for a 10 year term only pays out £120k so 20% return over 10 years - still garbage.

You can have annuities which pay out if you die before a certain age. Or, indeed, at whatever age you die.  

Keep in mind that its not like you invested 300K and got 450K in 20 years’ time with 50% return.  Payments start right away.  So, in 10 years you got most of your money back but “return” keeps coming.  

Crucially, “losing it all by dieing (sic)” isn’t a risk at all. Its a certainty.  Whether you buy annuity or not.  

dunstonh

Annuities are rubbish.

No they are not.  They are a viable option for many people but not viable for many others.  There are also a number of different annuity product types.  You have just "rubbished" an entire range of options but seem to be only talking about a very niche option called fixed term annuities. 

£300k for 20 years gives £450k over the term so a 50% return in 20 years if you manage to live that long? 
You’d have to be crazy to accept that, for the risk of losing it all by dieing I’d want at least a 200% return. 

The death benefits are selectable.   Why are you assuming there would be none?

Johnnyy_Boy

I’m not particularly savvy on all this so when I run a quote on my pot and what I can get, an annuity looks quite attractive to me. Planning to possibly quit next year and have a pot of around 600k. With taking the tax free amount, the quotes at the moment are around 30k a year for life. Now I appreciate there is probably a bit more to it than that but if I got that figure along with my state pension I would be pretty happy. I’m single with no dependants. The attraction to me is that I would seemingly not have to do anything else other than get my money every month. Of course, I’m sure though there are good sound reasons why I shouldn’t do it.

dunstonh

I’m not particularly savvy on all this so when I run a quote on my pot and what I can get, an annuity looks quite attractive to me.

you are probably looking at a lifetime annuity.  Not a fixed term annuity or other types.     They are currently more attractive than pretty much most periods over the last 10 years.

Of course, I’m sure though there are good sound reasons why I shouldn’t do it.

As long as you include indexation, then you will be fine.

Qyburn

ader42 said:

The same site shows that the same annuity with a lump sum payment after 20 years of the original investment amount, e.g. £300k would buy an income of £275k over the same term in addition to a £300k payout.

How does that lump sum work, is it paid out or does it remain in the pension fund? What about tax?

Albermarle

Johnnyy_Boy said:

I’m not particularly savvy on all this so when I run a quote on my pot and what I can get, an annuity looks quite attractive to me. Planning to possibly quit next year and have a pot of around 600k. With taking the tax free amount, the quotes at the moment are around 30k a year for life. Now I appreciate there is probably a bit more to it than that but if I got that figure along with my state pension I would be pretty happy. I’m single with no dependants. The attraction to me is that I would seemingly not have to do anything else other than get my money every month. Of course, I’m sure though there are good sound reasons why I shouldn’t do it.

There are sound reasons not to do it, and sound reasons to do it.
The downside for many people is that there is normally nothing to leave as an inheritance ( although some more specialised annuities can pay out some lump sums)
The main upside of course is that you get a guaranteed income and no thought ( about investing strategy for example) has to go into it, once payments start.

It is often said on here that you will get a better deal going via an IFA, than you will yourself, despite them taking a fee.
Apart from a possibly better deal, at least you will get a product that suits your situation as it seems that there are more types of annuity available than those offered by the main on line providers.
You should be aware that annuity rates change all the time. They were poor up until quite recently, but then started to improve this year but now seem to have peaked. Next year they may not be quite as good.

Malthusian

Qyburn said:

How does that lump sum work, is it paid out or does it remain in the pension fund? What about tax?

It remains in the pension fund. Unless you withdraw it. Which would be a strange thing to do as it would be taxed all at once as income. You have the same options in terms of buying another annuity, taking income drawdown, leaving it there etc than you do now - assuming the rules haven't changed.
The question would be what you are going to do with a £300,000 pension fund after 20 years of annuity payments - in your mid 80s? You could buy another annuity at a much higher rate, but that means you've deprived yourself of income for 20 years for the sake of more income when you are much less active, if you are even still here. You could have bought a significantly higher lifetime annuity in the first place.