Investment choices for Aviva pension

itman

Good points folks. I need a bit more reading.

I did read that as gilts reduce in value, annuities rise at the same rate as they are linked. Is this about right?

In which case, if I was intending to take an annuity when cashing in then this would be a good way of protecting my investment, right?

And it sounds like you can have your cake and eat it with gilts? With a fixed rate savings account (I also have a few of these) I'm locked in and can't cash in before maturity even if rates double. So I should maybe look at TR35 gilts instead of these?

Any other safe, solid return investments I should look at?

DRS1

Will Aviva let you invest your pension direct into a gilt? Or will you have to use a gilt fund? Gilts and Gilt Funds are quite different animals.

Yes in theory gilts and annuities are linked in the way you suggest. But remember there are two types of gilt so if you are going for an index linked annuity you want to be in index linked gilts. You also need to have index linked gilts of the right duration. Don't ask me to explain how you work that out. There are some threads on here which have explanations. But if your annuity is not going to start until 2035 I don't think you want a gilt which matures in 2035 (even though that may look sensible).

In case you are wondering what sort of idiot would invest in the wrong type of gilts - that would be me. There was a good reason for it at the time but there you are.

itman

It was gilt funds that I was looking at initially. Not sure if I can invest direct into a gilt.

Nothing to stop me moving out of Aviva I suppose. However, the more I hear about the complications and pitfalls of gilts, the more I'm getting scared off tbh.

Are there any other 'safe' investments for my Aviva pension that reduce my exposure to the stock market but keep me above inflation? Thx

huw01

https://forums.moneysavingexpert.com/discussion/6657265/investment-choices-for-aviva-pension

I think you've got the minimum pension age wrong. If you're 51 now you will be too young to claim your pension at 55. In April 2028 the minimum age to claim a pension rises to 57. You won't be 55 until 2030 by my calculations by which time the law change will have kicked in meaning you'll have to wait until you're 57 which would be 2032

https://www.aviva.co.uk/retirement/pension-basics/changes-to-pension-age/

gravel_2

https://forums.moneysavingexpert.com/discussion/comment/81906060#Comment_81906060

Your own link lists Aviva pension products with a protected pension age. Given they have £500k+ in Aviva there is a good chance OP's product meets the criteria for protected pension age of 55…

OP also says they are likely to hold off 5 or 10 years before drawing down so what was the point of your post?

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81905968#Comment_81905968

Sometimes it is good not to have too much choice.

Certainly when I was looking to buy an annuity with my Scottish Widows pension I only had two gilts funds to pick from - an index linked one and a conventional one. Wondering about duration just didn't come into it.

Gilts and gilt funds aren't necessarily "safe". I held units in something called INXG through 2022 and the figures are still red to this day.

But if you are buying an annuity the important thing is the relationship between gilts and the annuity (when the insurer goes out to find investments to support the annuity it will be buying gilts). In theory if the price of gilts goes up the annuity rate comes down and vice versa. So what you lose on the swings you gain on the roundabouts.

No other investment fits the bill. I think. Someone may be along to set me right there.

Now you may choose something like a cash fund so the value doesn't go down, That may keep your investment at a desired amount. But it won't do anything about changing annuity rates. So if they go the wrong way your desired amount may not buy what it would have done six months earlier. But at least you would have taken one variable out of the equation.

If you stayed invested in stocks and shares you'd have two variables. Are the stocks and shares going up or down and is the annuity rate going up or down. What sends the annuity rate down may also send the stock price down.

huw01

https://forums.moneysavingexpert.com/discussion/comment/81906612#Comment_81906612

Pointing out the legislative changes coming in 2028 as generally people are unaware of them.