Purchasing Annuity from pot already in drawdown 6 March at 8:07AM in Pensions, annuities & retirement planning 3 replies 250 views

Superdude0499

If I put all of my pension into drawdown at age 60, taking full TFLS and drawing down at a suitable rate, then at 67 decide I’d like to purchase a fixed term annuity, how does that work?

i.e. if I want to spend 300,000 on annuity does the whole amount come from the now crystallised pot or is there some disadvantage of not having done this from the outset?

thanks in advance.

dunstonh

 then at 67 decide I’d like to purchase a fixed term annuity, how does that work?

Why a fixed-term annuity?   It's a niche product that commercially, doesn't often make sense.      If you are looking for certainty from age A to age B then it can do.  However, buying it post state pension age with no other gaps to fill would make it a less common purchase.

i.e. if I want to spend 300,000 on annuity does the whole amount come from the now crystallised pot or is there some disadvantage of not having done this from the outset?

It makes no difference

Superdude0499

Thanks for the response Dundtonh. The fixing between ages was precisely what I was thinking. I.e. fixed amount to supplement SP from 67/8 for 20 years. I thought perhaps that might be less expensive than for life but maybe it isn’t.

Only 51 atm so plenty of time to mull things over.

dunstonh

Superdude0499 said:

Thanks for the response Dundtonh. The fixing between ages was precisely what I was thinking. I.e. fixed amount to supplement SP from 67/8 for 20 years. I thought perhaps that might be less expensive than for life but maybe it isn’t.

Only 51 atm so plenty of time to mull things over.

That fix would pretty much match life expectancy (ballpark anyway).   So, a lifetime annuity may well be better.  Especially if you are looking to include guarantees (return of unused fund value or 20-30 years)