Rejigging my plan using an annuity

Triumph13

Presumably wife's DBs have survivor benefits?  If so it does seem slightly unsporting not to do the same with your annuity.

I would suggest a 50% survivor, RPIU annuity bought as soon as you stop work (or possibly earlier to lock in the good rate and just stuff the income back in a SIPP until you stop work to avoid 40% tax).  Furthermore, I'd probably spend the full  75% of SIPP 1 buying an annuity, adding the TFLS to the ISAs, and burn through the second SIPP bridging the gap until all SPs and DBs are online.

That gives you £20k a year more than you are currently living on.  And >£1m in ISAs just in case - much of which you may want to gift soon and concentrate on living for seven years to avoid the IHT bill!

SouthCoastBoy

Triumph13 said:

Presumably wife's DBs have survivor benefits?  If so it does seem slightly unsporting not to do the same with your annuity.

I would suggest a 50% survivor, RPIU annuity bought as soon as you stop work (or possibly earlier to lock in the good rate and just stuff the income back in a SIPP until you stop work to avoid 40% tax).  Furthermore, I'd probably spend the full  75% of SIPP 1 buying an annuity, adding the TFLS to the ISAs, and burn through the second SIPP bridging the gap until all SPs and DBs are online.

That gives you £20k a year more than you are currently living on.  And >£1m in ISAs just in case - much of which you may want to gift soon and concentrate on living for seven years to avoid the IHT bill!

Thks for the response, I do get survivor benefits 50% one and 1/3 on another, so only equates to around 6k, if more expensive I don't think I need to worry about it covering my wife with additional guaranteed income, so will already have 26k coming in. My wife can always buy an annuity with some of SIPP1 if she feels she needs it.

If I buy an annuity while still at work I don't think I will be able to fund more than 10k per tax year into my pension? If so don't think that is a starter.

I just don't think I need 75% of SIPP1 as annuity, as don't need the money I would prefer to leave it untouched so it can grow, it is 100% equities. SIPP2 TFLS and a bit of Cash ISA money should me through to 67.

DRS1

SouthCoastBoy said:

DRS1 said:

You could always think about putting £150k of SIPP2 into an index linked gilts fund in the hope that it will correlate to some degree with the price of an index linked annuity.

Thks for the suggestion, to date I have always avoided bonds as not sure I fully understand the nuances

Yes well I won't be able to help much on the nuances.  All I know is that there is a theory that because the annuity is priced by reference to gilts if you invest in those gilts then you should be protecting yourself from movements in the price of the annuity.  If gilts go up and annuities become more expensive then you have more valuable investments to spend on the annuity.

Of course I have a feeling gilts aren't going up at the moment.  INXG has been on a steady downward path since late 2021.

DRS1

SouthCoastBoy said:

Triumph13 said:

Presumably wife's DBs have survivor benefits?  If so it does seem slightly unsporting not to do the same with your annuity.

I would suggest a 50% survivor, RPIU annuity bought as soon as you stop work (or possibly earlier to lock in the good rate and just stuff the income back in a SIPP until you stop work to avoid 40% tax).  Furthermore, I'd probably spend the full  75% of SIPP 1 buying an annuity, adding the TFLS to the ISAs, and burn through the second SIPP bridging the gap until all SPs and DBs are online.

That gives you £20k a year more than you are currently living on.  And >£1m in ISAs just in case - much of which you may want to gift soon and concentrate on living for seven years to avoid the IHT bill!

Thks for the response, I do get survivor benefits 50% one and 1/3 on another, so only equates to around 6k, if more expensive I don't think I need to worry about it covering my wife with additional guaranteed income, so will already have 26k coming in. My wife can always buy an annuity with some of SIPP1 if she feels she needs it.

If I buy an annuity while still at work I don't think I will be able to fund more than 10k per tax year into my pension? If so don't think that is a starter.

I just don't think I need 75% of SIPP1 as annuity, as don't need the money I would prefer to leave it untouched so it can grow, it is 100% equities. SIPP2 TFLS and a bit of Cash ISA money should me through to 67.

I think you were planning on going into drawdown before buying the annuity.  Drawing any taxable income under drawdown will trigger the MPAA but I think if you just buy an annuity on its own then that won't trigger the MPAA.

Triumph13

DRS1 said:

SouthCoastBoy said:

Triumph13 said:

Presumably wife's DBs have survivor benefits?  If so it does seem slightly unsporting not to do the same with your annuity.

I would suggest a 50% survivor, RPIU annuity bought as soon as you stop work (or possibly earlier to lock in the good rate and just stuff the income back in a SIPP until you stop work to avoid 40% tax).  Furthermore, I'd probably spend the full  75% of SIPP 1 buying an annuity, adding the TFLS to the ISAs, and burn through the second SIPP bridging the gap until all SPs and DBs are online.

That gives you £20k a year more than you are currently living on.  And >£1m in ISAs just in case - much of which you may want to gift soon and concentrate on living for seven years to avoid the IHT bill!

Thks for the response, I do get survivor benefits 50% one and 1/3 on another, so only equates to around 6k, if more expensive I don't think I need to worry about it covering my wife with additional guaranteed income, so will already have 26k coming in. My wife can always buy an annuity with some of SIPP1 if she feels she needs it.

If I buy an annuity while still at work I don't think I will be able to fund more than 10k per tax year into my pension? If so don't think that is a starter.

I just don't think I need 75% of SIPP1 as annuity, as don't need the money I would prefer to leave it untouched so it can grow, it is 100% equities. SIPP2 TFLS and a bit of Cash ISA money should me through to 67.

I think you were planning on going into drawdown before buying the annuity.  Drawing any taxable income under drawdown will trigger the MPAA but I think if you just buy an annuity on its own then that won't trigger the MPAA.

DRS1 said:

SouthCoastBoy said:

Triumph13 said:

Presumably wife's DBs have survivor benefits?  If so it does seem slightly unsporting not to do the same with your annuity.

I would suggest a 50% survivor, RPIU annuity bought as soon as you stop work (or possibly earlier to lock in the good rate and just stuff the income back in a SIPP until you stop work to avoid 40% tax).  Furthermore, I'd probably spend the full  75% of SIPP 1 buying an annuity, adding the TFLS to the ISAs, and burn through the second SIPP bridging the gap until all SPs and DBs are online.

That gives you £20k a year more than you are currently living on.  And >£1m in ISAs just in case - much of which you may want to gift soon and concentrate on living for seven years to avoid the IHT bill!

Thks for the response, I do get survivor benefits 50% one and 1/3 on another, so only equates to around 6k, if more expensive I don't think I need to worry about it covering my wife with additional guaranteed income, so will already have 26k coming in. My wife can always buy an annuity with some of SIPP1 if she feels she needs it.

If I buy an annuity while still at work I don't think I will be able to fund more than 10k per tax year into my pension? If so don't think that is a starter.

I just don't think I need 75% of SIPP1 as annuity, as don't need the money I would prefer to leave it untouched so it can grow, it is 100% equities. SIPP2 TFLS and a bit of Cash ISA money should me through to 67.

I think you were planning on going into drawdown before buying the annuity.  Drawing any taxable income under drawdown will trigger the MPAA but I think if you just buy an annuity on its own then that won't trigger the MPAA.

That's right. Generally purchasing an annuity won't trigger the MPAA in the same way that starting a DB pension doesn't.  I believe there may be some special cases for 'non-standard' annuities though.

You say that you want to leave SIPP 1 to grow.  For what purpose? So that you can look at big numbers on a screen?  So that it gets big enough you end up paying 40% tax when you withdraw it?  So that it gobbles up a big share of your nil rate band when it comes to inheritance tax?  Not trying to be rude, just wanting to challenge the assumption that having a lot of money in a SIPP is a good thing.  It's all too easy to get hooked on the idea of more money as an end in itself, rather than a tool that lets you do things.

ali_bear

DRS1 said:

SouthCoastBoy said:

Triumph13 said:

Presumably wife's DBs have survivor benefits?  If so it does seem slightly unsporting not to do the same with your annuity.

I would suggest a 50% survivor, RPIU annuity bought as soon as you stop work (or possibly earlier to lock in the good rate and just stuff the income back in a SIPP until you stop work to avoid 40% tax).  Furthermore, I'd probably spend the full  75% of SIPP 1 buying an annuity, adding the TFLS to the ISAs, and burn through the second SIPP bridging the gap until all SPs and DBs are online.

That gives you £20k a year more than you are currently living on.  And >£1m in ISAs just in case - much of which you may want to gift soon and concentrate on living for seven years to avoid the IHT bill!

Thks for the response, I do get survivor benefits 50% one and 1/3 on another, so only equates to around 6k, if more expensive I don't think I need to worry about it covering my wife with additional guaranteed income, so will already have 26k coming in. My wife can always buy an annuity with some of SIPP1 if she feels she needs it.

If I buy an annuity while still at work I don't think I will be able to fund more than 10k per tax year into my pension? If so don't think that is a starter.

I just don't think I need 75% of SIPP1 as annuity, as don't need the money I would prefer to leave it untouched so it can grow, it is 100% equities. SIPP2 TFLS and a bit of Cash ISA money should me through to 67.

I think you were planning on going into drawdown before buying the annuity.  Drawing any taxable income under drawdown will trigger the MPAA but I think if you just buy an annuity on its own then that won't trigger the MPAA.

That is news to me. But even so your annuity income would be eating into your basic rate tax band from then onwards. There may be some exceptions around pensions but generally I don't think it makes sense to be both accumulating and deaccum. at the same time. 

Albermarle

Triumph13 said:

DRS1 said:

SouthCoastBoy said:

Triumph13 said:

Presumably wife's DBs have survivor benefits?  If so it does seem slightly unsporting not to do the same with your annuity.

I would suggest a 50% survivor, RPIU annuity bought as soon as you stop work (or possibly earlier to lock in the good rate and just stuff the income back in a SIPP until you stop work to avoid 40% tax).  Furthermore, I'd probably spend the full  75% of SIPP 1 buying an annuity, adding the TFLS to the ISAs, and burn through the second SIPP bridging the gap until all SPs and DBs are online.

That gives you £20k a year more than you are currently living on.  And >£1m in ISAs just in case - much of which you may want to gift soon and concentrate on living for seven years to avoid the IHT bill!

Thks for the response, I do get survivor benefits 50% one and 1/3 on another, so only equates to around 6k, if more expensive I don't think I need to worry about it covering my wife with additional guaranteed income, so will already have 26k coming in. My wife can always buy an annuity with some of SIPP1 if she feels she needs it.

If I buy an annuity while still at work I don't think I will be able to fund more than 10k per tax year into my pension? If so don't think that is a starter.

I just don't think I need 75% of SIPP1 as annuity, as don't need the money I would prefer to leave it untouched so it can grow, it is 100% equities. SIPP2 TFLS and a bit of Cash ISA money should me through to 67.

I think you were planning on going into drawdown before buying the annuity.  Drawing any taxable income under drawdown will trigger the MPAA but I think if you just buy an annuity on its own then that won't trigger the MPAA.

DRS1 said:

SouthCoastBoy said:

Triumph13 said:

Presumably wife's DBs have survivor benefits?  If so it does seem slightly unsporting not to do the same with your annuity.

I would suggest a 50% survivor, RPIU annuity bought as soon as you stop work (or possibly earlier to lock in the good rate and just stuff the income back in a SIPP until you stop work to avoid 40% tax).  Furthermore, I'd probably spend the full  75% of SIPP 1 buying an annuity, adding the TFLS to the ISAs, and burn through the second SIPP bridging the gap until all SPs and DBs are online.

That gives you £20k a year more than you are currently living on.  And >£1m in ISAs just in case - much of which you may want to gift soon and concentrate on living for seven years to avoid the IHT bill!

Thks for the response, I do get survivor benefits 50% one and 1/3 on another, so only equates to around 6k, if more expensive I don't think I need to worry about it covering my wife with additional guaranteed income, so will already have 26k coming in. My wife can always buy an annuity with some of SIPP1 if she feels she needs it.

If I buy an annuity while still at work I don't think I will be able to fund more than 10k per tax year into my pension? If so don't think that is a starter.

I just don't think I need 75% of SIPP1 as annuity, as don't need the money I would prefer to leave it untouched so it can grow, it is 100% equities. SIPP2 TFLS and a bit of Cash ISA money should me through to 67.

I think you were planning on going into drawdown before buying the annuity.  Drawing any taxable income under drawdown will trigger the MPAA but I think if you just buy an annuity on its own then that won't trigger the MPAA.

That's right. Generally purchasing an annuity won't trigger the MPAA in the same way that starting a DB pension doesn't.  I believe there may be some special cases for 'non-standard' annuities though.

You say that you want to leave SIPP 1 to grow.  For what purpose? So that you can look at big numbers on a screen?  So that it gets big enough you end up paying 40% tax when you withdraw it?  So that it gobbles up a big share of your nil rate band when it comes to inheritance tax?  Not trying to be rude, just wanting to challenge the assumption that having a lot of money in a SIPP is a good thing.  It's all too easy to get hooked on the idea of more money as an end in itself, rather than a tool that lets you do things.

The OP is a regular poster and is very cautious. 
The purpose is to give security in case of a massive and prolonged worldwide financial crash, with some rampant inflation thrown in. 

Triumph13

Albermarle said:

Triumph13 said:

DRS1 said:

SouthCoastBoy said:

Triumph13 said:

Presumably wife's DBs have survivor benefits?  If so it does seem slightly unsporting not to do the same with your annuity.

I would suggest a 50% survivor, RPIU annuity bought as soon as you stop work (or possibly earlier to lock in the good rate and just stuff the income back in a SIPP until you stop work to avoid 40% tax).  Furthermore, I'd probably spend the full  75% of SIPP 1 buying an annuity, adding the TFLS to the ISAs, and burn through the second SIPP bridging the gap until all SPs and DBs are online.

That gives you £20k a year more than you are currently living on.  And >£1m in ISAs just in case - much of which you may want to gift soon and concentrate on living for seven years to avoid the IHT bill!

Thks for the response, I do get survivor benefits 50% one and 1/3 on another, so only equates to around 6k, if more expensive I don't think I need to worry about it covering my wife with additional guaranteed income, so will already have 26k coming in. My wife can always buy an annuity with some of SIPP1 if she feels she needs it.

If I buy an annuity while still at work I don't think I will be able to fund more than 10k per tax year into my pension? If so don't think that is a starter.

I just don't think I need 75% of SIPP1 as annuity, as don't need the money I would prefer to leave it untouched so it can grow, it is 100% equities. SIPP2 TFLS and a bit of Cash ISA money should me through to 67.

I think you were planning on going into drawdown before buying the annuity.  Drawing any taxable income under drawdown will trigger the MPAA but I think if you just buy an annuity on its own then that won't trigger the MPAA.

DRS1 said:

SouthCoastBoy said:

Triumph13 said:

Presumably wife's DBs have survivor benefits?  If so it does seem slightly unsporting not to do the same with your annuity.

I would suggest a 50% survivor, RPIU annuity bought as soon as you stop work (or possibly earlier to lock in the good rate and just stuff the income back in a SIPP until you stop work to avoid 40% tax).  Furthermore, I'd probably spend the full  75% of SIPP 1 buying an annuity, adding the TFLS to the ISAs, and burn through the second SIPP bridging the gap until all SPs and DBs are online.

That gives you £20k a year more than you are currently living on.  And >£1m in ISAs just in case - much of which you may want to gift soon and concentrate on living for seven years to avoid the IHT bill!

Thks for the response, I do get survivor benefits 50% one and 1/3 on another, so only equates to around 6k, if more expensive I don't think I need to worry about it covering my wife with additional guaranteed income, so will already have 26k coming in. My wife can always buy an annuity with some of SIPP1 if she feels she needs it.

If I buy an annuity while still at work I don't think I will be able to fund more than 10k per tax year into my pension? If so don't think that is a starter.

I just don't think I need 75% of SIPP1 as annuity, as don't need the money I would prefer to leave it untouched so it can grow, it is 100% equities. SIPP2 TFLS and a bit of Cash ISA money should me through to 67.

I think you were planning on going into drawdown before buying the annuity.  Drawing any taxable income under drawdown will trigger the MPAA but I think if you just buy an annuity on its own then that won't trigger the MPAA.

That's right. Generally purchasing an annuity won't trigger the MPAA in the same way that starting a DB pension doesn't.  I believe there may be some special cases for 'non-standard' annuities though.

You say that you want to leave SIPP 1 to grow.  For what purpose? So that you can look at big numbers on a screen?  So that it gets big enough you end up paying 40% tax when you withdraw it?  So that it gobbles up a big share of your nil rate band when it comes to inheritance tax?  Not trying to be rude, just wanting to challenge the assumption that having a lot of money in a SIPP is a good thing.  It's all too easy to get hooked on the idea of more money as an end in itself, rather than a tool that lets you do things.

The OP is a regular poster and is very cautious. 
The purpose is to give security in case of a massive and prolonged worldwide financial crash, with some rampant inflation thrown in. 

A bigger annuity would probably the best way to address the prolonged crash, but maybe not the rampant inflation. 

I would still be inclined to run down the SIPPs in the bridging period and keep the ISAs / TFLSs as long term insurance rather than vice versa,  The SIPPs are less efficient for eventual inheritance (unless used for regular gifts from income) and much less flexible if there is ever the need to get a large amount out at once without suffering punitive tax rates.