Short term annuity

SouthCoastBoy

Spivo46 said:

GSP said:

I don’t know the size of your pension fund, but did you look at say giving the provider £560k to receive back £500k and what that would bring in?Obviously everyone has different reasons and strategies.

I have just taken out an L&G retirement fixed term income plan. Putting in a lump sum of £266,250 (after taking the TFLS) it pays £11,300 over 3 years. At the end of the 3 years it pays back £270,000. Peace of mind for 3 years and i can review the position in 2026

Maybe I have misunderstood but are you saying annuity cost £266,250 and for that you get 11,300 non index linked for 3 years and then received £270,000 back? If so why not just invest it a some fixed term bonds? You can get around 5.5% per annum, which equates to around  14500 per annum, appreciate you may have to pay tax if in receipt of other income, but the annuity is also liable to tax. Not sure I can see the benefit?

BoxerfanUK

SouthCoastBoy said:

Spivo46 said:

GSP said:

I don’t know the size of your pension fund, but did you look at say giving the provider £560k to receive back £500k and what that would bring in?Obviously everyone has different reasons and strategies.

I have just taken out an L&G retirement fixed term income plan. Putting in a lump sum of £266,250 (after taking the TFLS) it pays £11,300 over 3 years. At the end of the 3 years it pays back £270,000. Peace of mind for 3 years and i can review the position in 2026

Maybe I have misunderstood but are you saying annuity cost £266,250 and for that you get 11,300 non index linked for 3 years and then received £270,000 back? If so why not just invest it a some fixed term bonds? You can get around 5.5% per annum, which equates to around  14500 per annum, appreciate you may have to pay tax if in receipt of other income, but the annuity is also liable to tax. Not sure I can see the benefit?

How would one go about that?  My OH is thinking fixed term annuity too, but if this is another option!

Spivo46

SouthCoastBoy said:

Spivo46 said:

GSP said:

I don’t know the size of your pension fund, but did you look at say giving the provider £560k to receive back £500k and what that would bring in?Obviously everyone has different reasons and strategies.

I have just taken out an L&G retirement fixed term income plan. Putting in a lump sum of £266,250 (after taking the TFLS) it pays £11,300 over 3 years. At the end of the 3 years it pays back £270,000. Peace of mind for 3 years and i can review the position in 2026

Maybe I have misunderstood but are you saying annuity cost £266,250 and for that you get 11,300 non index linked for 3 years and then received £270,000 back? If so why not just invest it a some fixed term bonds? You can get around 5.5% per annum, which equates to around  14500 per annum, appreciate you may have to pay tax if in receipt of other income, but the annuity is also liable to tax. Not sure I can see the benefit?

I don't understand how i would go about fixed term bonds? The legal and general product is very user friendly and flexible in terms of access and death benefits. 
"Not sure i can see the benefit". I see this a decent assured return, it is guaranteed. This suits my short term needs with the flexibility of being in a position to review in 3 years when i am 66.

Spivo46

Spivo46 said:

SouthCoastBoy said:

Spivo46 said:

GSP said:

I don’t know the size of your pension fund, but did you look at say giving the provider £560k to receive back £500k and what that would bring in?Obviously everyone has different reasons and strategies.

I have just taken out an L&G retirement fixed term income plan. Putting in a lump sum of £266,250 (after taking the TFLS) it pays £11,300 over 3 years. At the end of the 3 years it pays back £270,000. Peace of mind for 3 years and i can review the position in 2026

Maybe I have misunderstood but are you saying annuity cost £266,250 and for that you get 11,300 non index linked for 3 years and then received £270,000 back? If so why not just invest it a some fixed term bonds? You can get around 5.5% per annum, which equates to around  14500 per annum, appreciate you may have to pay tax if in receipt of other income, but the annuity is also liable to tax. Not sure I can see the benefit?

I don't understand how i would go about fixed term bonds? The legal and general product is very user friendly and flexible in terms of access and death benefits. 
"Not sure i can see the benefit". I see this a decent assured return, it is guaranteed. This suits my short term needs with the flexibility of being in a position to review in 3 years when i am 66.

....and i assume a fixed term bond will not be suitable to transfer to using an uncrystalised pension pot

BoxerfanUK

Spivo46 said:

Spivo46 said:

SouthCoastBoy said:

Spivo46 said:

GSP said:

I don’t know the size of your pension fund, but did you look at say giving the provider £560k to receive back £500k and what that would bring in?Obviously everyone has different reasons and strategies.

I have just taken out an L&G retirement fixed term income plan. Putting in a lump sum of £266,250 (after taking the TFLS) it pays £11,300 over 3 years. At the end of the 3 years it pays back £270,000. Peace of mind for 3 years and i can review the position in 2026

Maybe I have misunderstood but are you saying annuity cost £266,250 and for that you get 11,300 non index linked for 3 years and then received £270,000 back? If so why not just invest it a some fixed term bonds? You can get around 5.5% per annum, which equates to around  14500 per annum, appreciate you may have to pay tax if in receipt of other income, but the annuity is also liable to tax. Not sure I can see the benefit?

I don't understand how i would go about fixed term bonds? The legal and general product is very user friendly and flexible in terms of access and death benefits. 
"Not sure i can see the benefit". I see this a decent assured return, it is guaranteed. This suits my short term needs with the flexibility of being in a position to review in 3 years when i am 66.

....and i assume a fixed term bond will not be suitable to transfer to using an uncrystalised pension pot

By the same token, a fixed term annuity isn't suitable to buy using an uncrystallised pension pot either is it?  Unless the purchaser is happy to lose the right to the 25% tax free element!

Spivo46

BoxerfanUK said:

Spivo46 said:

Spivo46 said:

SouthCoastBoy said:

Spivo46 said:

GSP said:

I don’t know the size of your pension fund, but did you look at say giving the provider £560k to receive back £500k and what that would bring in?Obviously everyone has different reasons and strategies.

I have just taken out an L&G retirement fixed term income plan. Putting in a lump sum of £266,250 (after taking the TFLS) it pays £11,300 over 3 years. At the end of the 3 years it pays back £270,000. Peace of mind for 3 years and i can review the position in 2026

Maybe I have misunderstood but are you saying annuity cost £266,250 and for that you get 11,300 non index linked for 3 years and then received £270,000 back? If so why not just invest it a some fixed term bonds? You can get around 5.5% per annum, which equates to around  14500 per annum, appreciate you may have to pay tax if in receipt of other income, but the annuity is also liable to tax. Not sure I can see the benefit?

I don't understand how i would go about fixed term bonds? The legal and general product is very user friendly and flexible in terms of access and death benefits. 
"Not sure i can see the benefit". I see this a decent assured return, it is guaranteed. This suits my short term needs with the flexibility of being in a position to review in 3 years when i am 66.

....and i assume a fixed term bond will not be suitable to transfer to using an uncrystalised pension pot

By the same token, a fixed term annuity isn't suitable to buy using an uncrystallised pension pot either is it?  Unless the purchaser is happy to lose the right to the 25% tax free element!

Yes, i am using an uncrystallised pension fund but upon purchase of the fixed term income plan i will receive the 25% TFLS and the remaining pot will become crystallised 

BoxerfanUK

Spivo46 said:

BoxerfanUK said:

Spivo46 said:

Spivo46 said:

SouthCoastBoy said:

Spivo46 said:

GSP said:

I don’t know the size of your pension fund, but did you look at say giving the provider £560k to receive back £500k and what that would bring in?Obviously everyone has different reasons and strategies.

I have just taken out an L&G retirement fixed term income plan. Putting in a lump sum of £266,250 (after taking the TFLS) it pays £11,300 over 3 years. At the end of the 3 years it pays back £270,000. Peace of mind for 3 years and i can review the position in 2026

Maybe I have misunderstood but are you saying annuity cost £266,250 and for that you get 11,300 non index linked for 3 years and then received £270,000 back? If so why not just invest it a some fixed term bonds? You can get around 5.5% per annum, which equates to around  14500 per annum, appreciate you may have to pay tax if in receipt of other income, but the annuity is also liable to tax. Not sure I can see the benefit?

I don't understand how i would go about fixed term bonds? The legal and general product is very user friendly and flexible in terms of access and death benefits. 
"Not sure i can see the benefit". I see this a decent assured return, it is guaranteed. This suits my short term needs with the flexibility of being in a position to review in 3 years when i am 66.

....and i assume a fixed term bond will not be suitable to transfer to using an uncrystalised pension pot

By the same token, a fixed term annuity isn't suitable to buy using an uncrystallised pension pot either is it?  Unless the purchaser is happy to lose the right to the 25% tax free element!

Yes, i am using an uncrystallised pension fund but upon purchase of the fixed term income plan i will receive the 25% TFLS and the remaining pot will become crystallised 

Oh I see, but I guess with a fixed term bond (whatever that is, if it differs from a pure fixed term savings bond) you could simply crystallise the pension pot, take the tax free lump sum and use whats left to buy the bond.

Spivo46

BoxerfanUK said:

Spivo46 said:

BoxerfanUK said:

Spivo46 said:

Spivo46 said:

SouthCoastBoy said:

Spivo46 said:

GSP said:

I don’t know the size of your pension fund, but did you look at say giving the provider £560k to receive back £500k and what that would bring in?Obviously everyone has different reasons and strategies.

I have just taken out an L&G retirement fixed term income plan. Putting in a lump sum of £266,250 (after taking the TFLS) it pays £11,300 over 3 years. At the end of the 3 years it pays back £270,000. Peace of mind for 3 years and i can review the position in 2026

Maybe I have misunderstood but are you saying annuity cost £266,250 and for that you get 11,300 non index linked for 3 years and then received £270,000 back? If so why not just invest it a some fixed term bonds? You can get around 5.5% per annum, which equates to around  14500 per annum, appreciate you may have to pay tax if in receipt of other income, but the annuity is also liable to tax. Not sure I can see the benefit?

I don't understand how i would go about fixed term bonds? The legal and general product is very user friendly and flexible in terms of access and death benefits. 
"Not sure i can see the benefit". I see this a decent assured return, it is guaranteed. This suits my short term needs with the flexibility of being in a position to review in 3 years when i am 66.

....and i assume a fixed term bond will not be suitable to transfer to using an uncrystalised pension pot

By the same token, a fixed term annuity isn't suitable to buy using an uncrystallised pension pot either is it?  Unless the purchaser is happy to lose the right to the 25% tax free element!

Yes, i am using an uncrystallised pension fund but upon purchase of the fixed term income plan i will receive the 25% TFLS and the remaining pot will become crystallised 

Oh I see, but I guess with a fixed term bond (whatever that is, if it differs from a pure fixed term savings bond) you could simply crystallise the pension pot, take the tax free lump sum and use whats left to buy the bond.

You would only buy the bond with the tax free cash. If you start using any of the taxable 75% of the pension pot you will pay tax on anything over the personal allowance. That is why i am using the L&G fixed income retirement plan. My 75% goes directly from my current provider to L&G. The fixed term bond will not work for me, as the tax kills the job!

SouthCoastBoy

Sorry my misunderstanding I thought the 266k was the potential tax free lump sum but obviously not.