Aviva options...?

JillyC8

Hi, I want to access 25% of my Aviva pension; total is approx £53,504 so I can take approx £13,376. I've been using their 'tool' to decide the best way of doing this so I'm looking for any wise opinions. This is my works pension which will continue to be paid into and grow after the withdrawal. Current monthly total being paid in is £378.
I've just turned 60 and have two other DB pensions plus fully paid up for govt pension (just for info) so I'm comfortable with doing this.
The options I'm looking at are:

TFLS with rest invested till I'm 65 or 67 - TFLS of £13,376 with the rest (£40,128.62) estimated to grow to £45,600 by the time I'm 65.

or

TFLS 25% and Annuity for life - TFLS of £13,376 with an annuity of £290.82 a month for life. (I'm in good health/non smoker etc).
 
or

Flexible Income - draw out the 25% TFLS as above, and then the tool estimates that if I take out £250 a month, it may run out anytime between age 71 and 84, depending on how it performs.

What would be the most sensible option in anyone's opinion? I plan to stay with my employer for now but will be looking at working part time, possibly elsewhere, in the next couple of years.

My original thought was to just take the TFLS and leave the rest invested, but now I'm looking at the Annuity option as well, as £290 a month for life from now would make a difference. Any advice would be welcome.

flaneurs_lobster

Others will be along with far more sensible answers but with respect to the annuity option - they have quoted an amount per month for life. That suggests that this product has no annual increase and that therefore it's value will be eroded by inflation over time.

If you are looking at an annuity (and it's a good time to do so since rates are high at the moment) then explore the options for increasing the payments annually - although this will decrease the initial monthly amount quoted considerably.

Marcon

JillyC8 said:

Hi, I want to access 25% of my Aviva pension; total is approx £53,504 so I can take approx £13,376. I've been using their 'tool' to decide the best way of doing this so I'm looking for any wise opinions. This is my works pension which will continue to be paid into and grow after the withdrawal. Current monthly total being paid in is £378.
I've just turned 60 and have two other DB pensions plus fully paid up for govt pension (just for info) so I'm comfortable with doing this.
The options I'm looking at are:

TFLS with rest invested till I'm 65 or 67 - TFLS of £13,376 with the rest (£40,128.62) estimated to grow to £45,600 by the time I'm 65.

or

TFLS 25% and Annuity for life - TFLS of £13,376 with an annuity of £290.82 a month for life. (I'm in good health/non smoker etc).
 
or

Flexible Income - draw out the 25% TFLS as above, and then the tool estimates that if I take out £250 a month, it may run out anytime between age 71 and 84, depending on how it performs.

What would be the most sensible option in anyone's opinion? I plan to stay with my employer for now but will be looking at working part time, possibly elsewhere, in the next couple of years.

My original thought was to just take the TFLS and leave the rest invested, but now I'm looking at the Annuity option as well, as £290 a month for life from now would make a difference. Any advice would be welcome.

You've said nothing at all about the value of your DB pensions, or your attitude to risk, or what your priorities are! Bit of an information vacuum...

'Advice' would be to start with the third of those - what matters most to you - and then look at whether acting on that is viable. Whether it's viable depends on how much DB pension you are expecting, and your attitude to risk.

Also check the rules of your employer's scheme. If you access it now, whether fully or partially, will it be seen as 'opting out'? If so, your employer could wait for 12 months before re-enrolling you, even if you ask to be re-enrolled before then.

JillyC8

Hi, the value of my DB pensions is irrelevant; I'm definitely taking the 25% from this pension - I'm asking advice on the best way to do this.

I don't know why my priorities make a difference other than to say I want to make the best of this particular pension when I apply to take the TFLS in the next few days and I will definitely be doing that. I would say I'm low/average risk, if that helps.

And no, my employer will continue to pay in as normal with no re-enrolment in 12 months' time, as I originally stated.

Marcon

JillyC8 said:

Hi, the value of my DB pensions is irrelevant; I'm definitely taking the 25% from this pension - I'm asking advice on the best way to do this.

I don't know why my priorities make a difference other than to say I want to make the best of this particular pension when I apply to take the TFLS in the next few days and I will definitely be doing that. I would say I'm low/average risk, if that helps.

The 'best way' is going to depend on other factors - such as the DB pensions you have/when they will kick in. You're expecting people to respond helpfully when there is nothing in your post enabling anyone to do other than speculate. Taking decisions in isolation from other factors rarely leads you to the best outcome.

JillyC8 said:

And no, my employer will continue to pay in as normal with no re-enrolment in 12 months' time, as I originally stated.

A lot of people make assumptions about what will happen and when. My comment was simply a prompt to check the point if you hadn't done so. 

wjr4

JillyC8 said:

Hi, the value of my DB pensions is irrelevant; I'm definitely taking the 25% from this pension - I'm asking advice on the best way to do this.

I don't know why my priorities make a difference other than to say I want to make the best of this particular pension when I apply to take the TFLS in the next few days and I will definitely be doing that. I would say I'm low/average risk, if that helps.

And no, my employer will continue to pay in as normal with no re-enrolment in 12 months' time, as I originally stated.

Nobody can say the best way to do this without knowing more about you. Hence why they are asking questions. Why do you need the PCLS now? Do you need an extra income (annuity)? Only you can decide that. 

JillyC8

I need the TFLS now for a reason I don't see the need to disclose. My two DB pensions will start at age 65 and will see me comfortably to retirement at 67, from which point I will receive full state pension, plus the two DB payments, plus whatever I receive from this pension. I intend to continue working part time at least up to retirement and maybe beyond. I have a small mortgage which will be paid off by age 65.

I'm not sure why I need to go into any more detail than that to receive advice on the best option out of the three.

The annuity looks attractive, but I hadn't considered the fact it is a set payment and will be eaten up by inflation in time (kindly informed by the first respondent above), however, of course having extra is attractive to me, as it would be to anyone.

I just want to make the best of it and my thoughts are around if it would make a great deal of difference to leave the rest where it is and hope it grows, or to go for the annuity option.

kempiejon

JillyC8 said:

Hi, the value of my DB pensions is irrelevant; I'm definitely taking the 25% from this pension - I'm asking advice on the best way to do this.

Interesting, this was quite a decision for me and I flip flopped between full 25% and then spend that down deferring to take FAD later or annual UFPLS, the money purchase annual allowance and keeping more of my pot sheltered longer. I've put it off for another year so be interested what swung it for you.
I ruled out an annuity but as I expect a healthy SIPP balance for a decade plus I could revisit when older.

Barralad77

If you put the second (Annuity) option aside I think it comes down to whether you want/need an extra £250 per month for the next 5 years (where, I’m assuming, it will be taxed, possibly at the higher rate of income tax?) or whether you don’t want/need it over that period and (hopefully) get 5 year’s of growth, only taking the money out when you want/need it (and potentially end up paying less tax on it). I suspect these are some of the missing details that others feel are constraining their ability to offer advice (which they would do if said detail was provided).

dunstonh

I'm not sure why I need to go into any more detail than that to receive advice on the best option out of the three.

It is because you are asking us about three options that have very different outcomes.     Your scenario could rule out certain options and make one the most obvious.   However, without knowing what your scenario is, nobody can tell you which option is best.  Hence the questions.

The annuity looks attractive, but I hadn't considered the fact it is a set payment and will be eaten up by inflation in time (kindly informed by the first respondent above), however, of course having extra is attractive to me, as it would be to anyone.

That was an example annuity.   There are other options on an annuity. e.g. fixed indexation, RPI or LPI.

LHW99

I plan to stay with my employer for now but will be looking at working part time, possibly elsewhere, in the next couple of years.

Depending on the "elsewhere" taking the Flexible option (taking out £250 per month) means you will trigger the money purchase annual allowance.

That limits you to putting no more than £10k pa into a DC pension going forward. It wouldn't affect paying in to the NHS pension as far as I know, but if the "elsewhere" is an employer that doesn't use a DB scheme it could.