Buying fixed term annuity from Savings, is it even possible?

Cmdr_Bond · 13 February at 7:25PM

Or family is in a situation where some cash may be being distributed.

One family member has little to nothing in the way of pensions, but A.I. (don't trust it) has lead me to believe there's a possibility of buying a Purchased Life Annuity from savings, not from a pension pot.

The suggestions it gives are that the income paid out is mostly tax free because it's simply returning capital, and that only pay tax on the interest.

But when I go to the likes of Aviva, or Canada Life, their gumpf points towards Lifetime plans only, or the fixed plans HAVE to be bought from pension pots.

Does anyone know of any places that allow you to buy something that behaves like a 10 year fixed term annuity, but solely from personal savings?

Dazed_and_C0nfused · 13 February at 7:29PM

https://forums.moneysavingexpert.com/discussion/6655263/buying-fixed-term-annuity-from-savings-is-it-even-possible

Canada Life refer to fixed term PLA's here.

https://www.canadalife.co.uk/retirement/purchased-life-annuity/

wmb194 · 13 February at 7:43PM

You can do the same sort of thing using a gilt ladder.

https://giltsyield.com/bond/

Cmdr_Bond · 13 February at 7:47PM

https://forums.moneysavingexpert.com/discussion/comment/81883542#Comment_81883542

Thanks - I tried to get more info, but was out of by "this is for professional advisors only"...

Cmdr_Bond · 13 February at 7:54PM

https://forums.moneysavingexpert.com/discussion/comment/81883566#Comment_81883566

Can you explain a Gilt Ladder?

I've looked into Gilts, and quite like them as a tax efficient long term investment. But not for a regular income, with or without a lump sum at the end.

masonic · 13 February at 8:00PM

https://forums.moneysavingexpert.com/discussion/comment/81883589#Comment_81883589

You can have a play with LateGenXer's gilt ladder app to see how they can be used to provide an income: https://lategenxer.streamlit.app/Gilt_Ladder

Switch to the Cash Flow tab to see how the suggested gilts produce a blend of income and returned capital that allows you to draw down an annual sum over the period. The default settings show how a sum of £81k can be used to provide 10 years worth of "income" at £10k pa.

wmb194 · 13 February at 8:05PM

https://forums.moneysavingexpert.com/discussion/comment/81883589#Comment_81883589

A ladder is just a mix of durations e.g., two year, five year, ten and so on. For conventional gilts the cash flows are known in advance so it's easy to know the interest and principal you'll receive when. You could have a ladder with a gilt maturing every year or you could keep it simple and have one ten year gilt paying c.4.5% in interest every year with a lump sum on maturity. You might do something similar with savings bonds but it's hard to find any beyond five years.

Capital gains on gilts are CGT-free so you could include low coupon gilts e.g., TG35 where it won't pay out much in interest but most of the overall gain will be paid out tax-free at maturity.