Aviva options...?

DRS1

That annuity rate looks very high to me - even for a single life level annuity (what is it 9% at 60?).  See HL's best rates on this page

Annuity Rates: View Best Annuity Rates from the UK Market

I wonder if the tool has made a mistake?

OP What you are doing is bit like if you went to the supermarket for a pint of milk and came out with a pint of milk and a box of tea bags.  You didn't want the annuity when you started looking so why do you want it now?  Because the rate is high?

JillyC8

I wouldn't have the means to pay more than £10,000 into a pension per annum, so that's not an issue. I guess I don't need the £250 extra a month, it would just be a nice to have.
So from the helpful parts of the responses above, I can see the best option is to take the TFLS and leave the rest invested.
Thanks all for those who responded usefully.

JillyC8

kempiejon said:

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.

For me the TFLS isn't that much, so there isn't a great deal for me to consider. I just need the money now for a personal (and very important) reason and seeing as my other pensions are both Defined Benefit, they are best left in place to mature as I will take a reduction in the payout if I tried to access the TFLSs now.

JillyC8

DRS1 said:

That annuity rate looks very high to me - even for a single life level annuity (what is it 9% at 60?).  See HL's best rates on this page

Annuity Rates: View Best Annuity Rates from the UK Market

I wonder if the tool has made a mistake?

OP What you are doing is bit like if you went to the supermarket for a pint of milk and came out with a pint of milk and a box of tea bags.  You didn't want the annuity when you started looking so why do you want it now?  Because the rate is high?

I guess that's what I'm trying to understand. I recall reading on a thread on these boards, where someone was advised to take a pension and annuity early because the rate at which it was expected to grow was small if left where it was.

When they had calculated how much income they would potentially receive from the annuity payout over the following 15 years, it made sense for them to access it early. I can't remember the detail but that was the general consensus, based around the fact the enquirer wanted to enjoy the benefits of more money now rather than later, so-to-speak.

And so that was my angle of thinking and I wanted to gather information generally.

Barralad77

DRS1 said:

That annuity rate looks very high to me - even for a single life level annuity (what is it 9% at 60?).  See HL's best rates on this page

Annuity Rates: View Best Annuity Rates from the UK Market

I wonder if the tool has made a mistake?

OP What you are doing is bit like if you went to the supermarket for a pint of milk and came out with a pint of milk and a box of tea bags.  You didn't want the annuity when you started looking so why do you want it now?  Because the rate is high?

Yes, I thought it too high as well. Coincidentally I also have a pension with Aviva that’s worth almost the same. Using the - admittedly, probably crude - calculator on Aviva’s site, and punching the OP’s figure of £53.5k in, it comes out (after taking 25% TFLS) at £2,560 per year, or £213 per month. Either the original figure is too high or I need to cash mine in right now….

JillyC8

Barralad77 said:

DRS1 said:

That annuity rate looks very high to me - even for a single life level annuity (what is it 9% at 60?).  See HL's best rates on this page

Annuity Rates: View Best Annuity Rates from the UK Market

I wonder if the tool has made a mistake?

OP What you are doing is bit like if you went to the supermarket for a pint of milk and came out with a pint of milk and a box of tea bags.  You didn't want the annuity when you started looking so why do you want it now?  Because the rate is high?

Yes, I thought it too high as well. Coincidentally I also have a pension with Aviva that’s worth almost the same. Using the - admittedly, probably crude - calculator on Aviva’s site, and punching the OP’s figure of £53.5k in, it comes out (after taking 25% TFLS) at £2,560 per year, or £213 per month. Either the original figure is too high or I need to cash mine in right now….

Yes you're right; I just re-checked and the quote is £213.68. My mistake.

DRS1

It is an impossible choice.  You don't know whether what your pension is invested in will go up or down over the next x years.  Hopefully it will go up especially as it is still getting contributions.  Nor do you know what annuity rates will do over the next x years.  In 2024 I took an annuity because I thought the rates were good.  In 2025 I took another and I think the rates were better.  Should I have waited and done it all in 2025?  Maybe but at least I have had an extra year of annuity. Hindsight is wonderful but not much use if you want to make a decision now.

You may want to play with the annuity quotes a little as someone suggested.  A level annuity is not necessarily the best especially if we go back to years of 10% inflation.  An RPI linked annuity could be sensible but you need to think about the DB pensions - how will they increase when they are in payment?  If you have all your basic needs covered by the DB pensions and they increase in line with CPI then maybe there is more scope to have this annuity as a level annuity.  But if the increases are capped (at 2.5% or 5%) then maybe this annuity should be an increasing one.

The amounts of the DB pensions are also important.  Would this annuity be a significant contributor to your overall income or would it be the pimple on the proverbial?

One final thought - you say you are in good health.  That doesn't help with annuities.  There are so called enhanced annuities which give better rates for those who have health conditions which can range from high cholesterol to a terminal illness and poor lifestyle choices eg smoking or heavy drinking.  It may be worth thinking if any of these things apply to you. 

JillyC8

DRS1 said:

It is an impossible choice.  You don't know whether what your pension is invested in will go up or down over the next x years.  Hopefully it will go up especially as it is still getting contributions.  Nor do you know what annuity rates will do over the next x years.  In 2024 I took an annuity because I thought the rates were good.  In 2025 I took another and I think the rates were better.  Should I have waited and done it all in 2025?  Maybe but at least I have had an extra year of annuity. Hindsight is wonderful but not much use if you want to make a decision now.

You may want to play with the annuity quotes a little as someone suggested.  A level annuity is not necessarily the best especially if we go back to years of 10% inflation.  An RPI linked annuity could be sensible but you need to think about the DB pensions - how will they increase when they are in payment?  If you have all your basic needs covered by the DB pensions and they increase in line with CPI then maybe there is more scope to have this annuity as a level annuity.  But if the increases are capped (at 2.5% or 5%) then maybe this annuity should be an increasing one.

The amounts of the DB pensions are also important.  Would this annuity be a significant contributor to your overall income or would it be the pimple on the proverbial?

One final thought - you say you are in good health.  That doesn't help with annuities.  There are so called enhanced annuities which give better rates for those who have health conditions which can range from high cholesterol to a terminal illness and poor lifestyle choices eg smoking or heavy drinking.  It may be worth thinking if any of these things apply to you. 

Hi, I would need to check my DB pensions regarding how they grow. Ultimately, I need to access some capital, and this pension is the best one to take the capital from. 

I will probably just take the TFLS of 25% for my needs and leave the rest where it is until retirement comes. My DB pensions differ, one is quite a bit more significant than the other, whereas this pension I'm referring to here is, I would say, a pimple on the proverbial.

ali_bear

Hi Jilly

Sounds like your DB pensions and SP can be relied upon to give you the regular retirement income for life that will pay all of your living costs etc. Based on this, you don't really need an annuity which does the same job. Having some pension fund that remains invested, so will continue to grow and hopefully beat inflation over the years, and which you can draw upon when some additional money is wanted or needed, is likely to be more useful for you. So of your three options I would say the third one would be better. 

JillyC8

ali_bear said:

Hi Jilly

Sounds like your DB pensions and SP can be relied upon to give you the regular retirement income for life that will pay all of your living costs etc. Based on this, you don't really need an annuity which does the same job. Having some pension fund that remains invested, so will continue to grow and hopefully beat inflation over the years, and which you can draw upon when some additional money is wanted or needed, is likely to be more useful for you. So of your three options I would say the third one would be better. 

Thank you; taking all into consideration, I think I will take the TFLS and leave the rest where it is for now. :-:smile: