Choosing annuity over draw down?

incus432

Yes. Otherwise you and those replying will just be duplicating.  There were comments about annuities which you asked about

Pumpkin23

Just to perhaps put it all a bit more clearly down, I have tax free access to a £220k pension pot from my deceased husband. The pot will not grow further. I am 60, will be in receipt of the full uk state pension at 67. I am looking for options of investing some or all the pension pot in the most tax efficient way. I currently have sufficient funds in my account to cover the next approx 5 years of my life. I would have to have access to take regular drawings from whatever I do with the pension pot at some stage in the next few years, to supplement my state pension.
I appreciate any advice, thank you.

Pumpkin23

Having looked into annuities, I feel they do not suit me, because I will have to pay tax on them once I receive my state pension as well, being over the threshold.

dunstonh

Just to perhaps put it all a bit more clearly down, I have tax free access to a £220k pension pot from my deceased husband. The pot will not grow further.
<snip>
 I am looking for options of investing some or all the pension pot in the most tax efficient way. 

Which will likely mean transferring it to a beneficiary pension in your name and investing it.  Then draw as needed.

Most modern mainstream pensions offer that functionality.   Some smaller, lesser known companies may not.

ali_bear

Sorry for your loss. It does sound like you may need to get proper advice from an IFA. But there is no need to rush into any arrangement. Take a little time to work out what you want to do. 

dunstonh

Pumpkin23 said:

Having looked into annuities, I feel they do not suit me, because I will have to pay tax on them once I receive my state pension as well, being over the threshold.

Why do you think you will pay tax on the annuity?

...note, wary of contributing on this thread when the other one is the main one.

Treva

Hi Pumpkin,

I think there is a lot of good advice here and also professional advice. I know nothing and in I'm in a similar situation. I'm going to keep money in premium bnds cash ISA's each year like you and hope that I can still have some tax free income after inflation. Slight difference is that I don't want my savings to die with me because I want to pass it all that remains on to my children.

I think if I was you I would work closer to retirement age. It's easy for me to say that though because I have already travelled the world.

Qyburn

Pumpkin23 said:

... I will be in receipt of a full state pension in 7 years time.
... Also I am in receipt of £400 PPF per month. I do not have a mortgage and I own my property.
... As to money ideally required on a monthly basis, to live and pay all bills, I estimate it at £2000 at the moment.

Assuming that £400/month continues then you need roughly £1,600 per month for 7 years, and £600/month thereafter. Given that's a big difference it might make sense to make separate arrangement for the first 7 years.

Is there such a thing as an annuity that pays out more in the first so many years?

FIREDreamer

Qyburn said:

Pumpkin23 said:

... I will be in receipt of a full state pension in 7 years time.
... Also I am in receipt of £400 PPF per month. I do not have a mortgage and I own my property.
... As to money ideally required on a monthly basis, to live and pay all bills, I estimate it at £2000 at the moment.

Assuming that £400/month continues then you need roughly £1,600 per month for 7 years, and £600/month thereafter. Given that's a big difference it might make sense to make separate arrangement for the first 7 years.

Is there such a thing as an annuity that pays out more in the first so many years?

No, just buy two annuities.

A 7 year temporary annuity for £1,000 per month
A lifetime annuity for £600 per month

Effect is the same as the single product desired (but I don’t think exists).

incus432

dunstonh said:

Pumpkin23 said:

Having looked into annuities, I feel they do not suit me, because I will have to pay tax on them once I receive my state pension as well, being over the threshold.

Why do you think you will pay tax on the annuity?

...note, wary of contributing on this thread when the other one is the main one.

I think they are combined in this thread now

The annuity is not automatically taxed at source?

In that case it does sound like an annuity might be a good solution - perhaps a 7 year fixed term one now and a lifetime one at the end