It's it worth putting 30k pension savings into an annuity or should I just put in an ISA?

Gobsh

It's it worth putting 30k pension savings into an annuity or should I just put it in an ISA (or high interest savings)?

I can get around 4% ISA at the moment, what would I get in an annuity?

I do realise I'll have to pay tax on 75% if I don't put it in an annuity 

What would you do?

Cobbler_tone

Don't try putting £30k into an ISA 

I'm sure the experts will tell you that it will depend on numerous factors, including what pension provisions you have now, your age and whether/when you are likely to want to access it.

Simon11

If you don't need it, why would you take it out and put it into an ISA?

Surely another option is to keep it within your pension wrapper and benefit from future gains which on average are higher than 4% pa.

DRS1

Once upon a time the bank base rate was 5% and I thought fine my savings will generate this much interest.  Two years later base rate was 0.5% and my interest was a tenth of what I had thought.  With an annuity whatever rate you are getting is fixed for life.
Still it is worth asking a broker if £30K is too small a sum to buy an annuity.  You take 25% as a tax free lump sum that leaves £22.5k..  If the annuity rate is 4% that gives you £900 pa. or £75 per month.
Will you get an annuity rate of 4%?  well that depends on those numerous factors like age health where you live what sort of annuity you want (single life or joint lives, flat or increasing, increasing by RPI or by a flat percentage. with or without a guarantee period, with or without value protection).
Good luck

FIREDreamer

DRS1 said:

Once upon a time the bank base rate was 5% and I thought fine my savings will generate this much interest.  Two years later base rate was 0.5% and my interest was a tenth of what I had thought.  With an annuity whatever rate you are getting is fixed for life.
Still it is worth asking a broker if £30K is too small a sum to buy an annuity.  You take 25% as a tax free lump sum that leaves £22.5k..  If the annuity rate is 4% that gives you £900 pa. or £75 per month.
Will you get an annuity rate of 4%?  well that depends on those numerous factors like age health where you live what sort of annuity you want (single life or joint lives, flat or increasing, increasing by RPI or by a flat percentage. with or without a guarantee period, with or without value protection).
Good luck

A level annuity would pay close to 7%, assuming age 60, so he would get about £1,600 pa fixed for life.

An inflation linked annuity would be about 4%, the £900 you quoted.

Albermarle

Gobsh said:

It's it worth putting 30k pension savings into an annuity or should I just put it in an ISA (or high interest savings)? Why not just leave them where they are, and make a withdrawal if/when  you need some cash ?

I can get around 4% ISA at the moment, what would I get in an annuity?

I do realise I'll have to pay tax on 75% if I don't put it in an annuity . Annuity income is also taxable.

What would you do?

Comments in bold

Gobsh

Food for thought thanks very much everyone 👍

Marcon

Gobsh said:

It's it worth putting 30k pension savings into an annuity or should I just put it in an ISA (or high interest savings)?

What would you do?

Depends what you're trying to achieve. What I would do isn't relevant - I'm not you and my age, risk appetite, assets etc could be completely different.

You've not mentioned the possibility of drawdown. Is that because you've already discounted it, or because you've yet to meet that concept?

woolly_wombat

Cobbler_tone said:

Don't try putting £30k into an ISA   

Particularly as you can only put 20k into ISAs in any one tax year 😉

Cobbler_tone

woolly_wombat said:

Cobbler_tone said:

Don't try putting £30k into an ISA   

Particularly as you can only put 20k into ISAs in any one tax year 😉

Hence the