Can't decide between an annuity for my three pension pots combined OR taking lump sums and emptying

epsilon4900

Thanks for the monevator link but I will confess that I found my eyes glazing over and reacting emotionally to what it just felt like was yet another way to make me pay for accessing what is supposed to be " my " investment! AKA my money! I hope no one is offended if I also share that the more I investigate the whole supposed pension freedom thing the more cynical I become about all of it. Really appreciating the responses on this my first ever thread on these Forum! Thanks!

Albermarle

epsilon4900 said:

Thanks for the monevator link but I will confess that I found my eyes glazing over and reacting emotionally to what it just felt like was yet another way to make me pay for accessing what is supposed to be " my " investment! AKA my money! I hope no one is offended if I also share that the more I investigate the whole supposed pension freedom thing the more cynical I become about all of it. Really appreciating the responses on this my first ever thread on these Forum! Thanks!

For most people only about half the pension pot is 'your money' . The rest being tax relief and employer contributions.
However you are correct all the detail and terminology can be a bit daunting to begin with. Not quite sure what you meant by this though.
to what it just felt like was yet another way to make me pay for accessing what is supposed to be " my " investment! 
You may be misunderstanding something.

ProDave

Interresting thread.

I was in a similar position 6 years ago.  I wanted to draw the 25% tax free and then take the rest later as drawdown.  At that time my little pot was also With Aviva.  When I enquired I was told there was no drawdown option and an annuity was all that was on offer then by Aviva.  Glad to see they are a bit more flexible now.

The complete lack of flexibility from Aviva then resulted in me transferring the lot to a HL SIPP where I too the 25% tax free on my 55th birthday, and the rest has been invested since and I will be starting to draw that next month.  My reasoning is to use this pot as a pre state pension income, the intention is to draw it at a rate that will empty the pot the day before my state pension starts.  It also enables me to get the contents of that pot withdrawn with very little income tax liability.  Anything left to be drawn once I reach SP age would attract more income tax.

dunstonh

Thanks for the monevator link but I will confess that I found my eyes glazing over and reacting emotionally to what it just felt like was yet another way to make me pay for accessing what is supposed to be " my " investment

If all the money was in a savings account at the bank you are still paying to access your money.   The difference is that the bank is implicit but investments are explicit.  Indeed, with modern investments, the charges on investments and wrappers etc are lower than the charges on savings accounts.

I hope no one is offended if I also share that the more I investigate the whole supposed pension freedom thing the more cynical I become about all of it.

Drawdown has been around almost 20 years.  The pension freedoms just enhanced options that already existed and removed some of the compulsions.    The increased flexibility effectively turned pensions into a tax wrapper instead of being a product.

Many consumers still see it is a product and not a tax wrapper but once that is understood, it should get easier.   However, what is it that you are cynical about because, on-the-whole, the pension freedoms were a  good thing.

I suspect there is a misunderstanding that is confusing you.

Sarahspangles

epsilon4900 said:

Thanks for the monevator link but I will confess that I found my eyes glazing over and reacting emotionally to what it just felt like was yet another way to make me pay for accessing what is supposed to be " my " investment! AKA my money! I hope no one is offended if I also share that the more I investigate the whole supposed pension freedom thing the more cynical I become about all of it. Really appreciating the responses on this my first ever thread on these Forum! Thanks!

SIPP providers aren’t charities, and the charges are more transparent than in most Defined Contribution pension schemes. There is admin time to buy funds on my behalf, hold my money (they pay interest on cash by the way) and run a website/app.

I doubt I’d be retiring in my 50s if pension freedoms hadn’t been introduced.

There’s lots to consider and I found it a bit stressful. You already know an annuity gives you certainty but no flexibility so I’m not sure what other options you have.

epsilon4900

Thanks everyone. I just meant that at this point where significant sums are amassed for me I want to take the monies out of one or possibly two of them. I don't understand why there is not an option to freeze the monies or protect them from the investment falling in value and just let me take the monies I wish subject to tax? If I use the allowance once I stop working I can remove all the monies up to my state pension and that suits me. I won't be spending it all but saving it in a  number of ways and living off some of it. I find it frustrating that I have to consider how the money is invested over the years when I am trying to take it out. I know this is lazy of me but I have not considered how it has been invested up to now. That is a failing but I have just not felt I had the skills to do that. I'm not looking for these monies to grow any further. I have another AVIVA policy which seems to grow and I am happy to leave that still accruing until my state pension would kick in.

AlanP_2

You can freeze the values by selling the investments held inside the pensions and having cash in there instead.

That way you have avoided investment risk but gained inflation risk.

epsilon4900

Thanks Alan. I had no idea I could do that. I'm now thinking I need to shop around to see who has the most economic drawdown accounts. Just received the offer from AVIVA and while it says they project it to grow by 1.3% a year which is less than inflation their charges seem to erode that still further. Says I think it would grow by .5% which seems ridiculous. I did say I wanted to remove all monies over 5 years so the safest kind/s of investment and so on but even so it seems a bit poor to me not even to keep up with inflation?

Albermarle

epsilon4900 said:

Thanks Alan. I had no idea I could do that. I'm now thinking I need to shop around to see who has the most economic drawdown accounts. Just received the offer from AVIVA and while it says they project it to grow by 1.3% a year which is less than inflation their charges seem to erode that still further. Says I think it would grow by .5% which seems ridiculous. I did say I wanted to remove all monies over 5 years so the safest kind/s of investment and so on but even so it seems a bit poor to me not even to keep up with inflation?

These are all just projections and to cover themselves they always tend to be on the pessimistic side.
However it is true that in general the safer the investment, the less likely it is that it will grow significantly.
Unusually at the moment cash interest rates are currently above inflation, so as suggested that might be your best route.
However you will need to check that your pension has the facility of a cash account, and how much interest it is paying.

dunstonh

Just received the offer from AVIVA and while it says they project it to grow by 1.3% a year which is less than inflation their charges seem to erode that still further. 

Projections are synthetic assumptions.  They are not prediction or estimates.    
You should also understand the assumptions that are used. For example, you have double counted inflation and misunderstood the interaction of charges with the projection.

 Says I think it would grow by .5% which seems ridiculous. I did say I wanted to remove all monies over 5 years so the safest kind/s of investment and so on but even so it seems a bit poor to me not even to keep up with inflation?

0.5% seems correct for short term non-equities investments.   And again, double counting on inflation (which over the last couple of years would not be a bad thing)