11 years of pension freedoms

OldScientist

https://forums.moneysavingexpert.com/discussion/comment/82042694#Comment_82042694

I'd agree - 'floor and upside' (as it is sometimes known) is a sound strategy. A significant decision is the amount to devote to the floor which requires a reasonable estimate of basic* expenses (e.g., at least food, council tax, utility bills, etc.). For those unable to bring themselves to buy an annuity, an inflation linked gilt ladder covering a long life forms a (typically) more expensive alternative (but is slightly more complex in operation than the annuity).

* Of course, one person's basic lifestyle is another person's luxury!

RogerPensionGuy

Just a point about an IFA and getting an annuity and a possible conflict of interest.

I had decided to make my investments and especially my DC SIPP as hands off as possible for future proofing as I don't like getting involved even in my 60s.

With annuity rates currently I personally felt an annuity ot two was/is a fair pathway for me, I saw a few IFAs the last few years and altho they agreed an annuity would be perfectly okay, they all said a well managed DC SIPP under their control would produce better results for me, I asked if they would guarantee this compared to just getting an RPI annuity with obviously no guarantees were possible.

My feeling was/is looking after my DC SIPP for hopefully decades would be a better business for them rater than doing an annuity or two for me.

For information on charges just getting a simple RPI annuity with no enhancements ranged from 0.6% to 2.72% for me. I questioned the IFA outfit charging 2.72% and they explained they considered my situation very complex.

I just picked a provider who uses a set or floor charge and because the annuity was pretty big my gross result was best.

One IFA provider did offer a decency deal for a simple annuity, but think it was a cap of 7 or 8K, but others offer a lower cap deal altho the client(me) agrees to pay the fee if for any reason the annuity doesn't complete.

Cheers Roger.

wjr4

https://forums.moneysavingexpert.com/discussion/comment/82044579#Comment_82044579

this post doesn’t make much sense at all.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82044579#Comment_82044579

The costs/fees etc associated with annuities are always rather difficult to pin down. In my case I'm in the USA and all my annuity type income comes from products I acquired through work or are government SPs so I've never had to go on the open market. I have a DB and back in the late 80s I bought a deferred annuity as it was the safest option offered by my employer and so I thought it was the best…I understood very little about my options. It guaranteed a minimum annual interest of 3% and paid bonuses based on the prevailing T-bill rates. I look back now and it's averaged 6%, so steady rather than spectacular. But the good part is that that the insurance company gives "loyalty bonuses" when converting the accumulated lump sum to a lifetime annuity. I just got a quote and the payout rate is 9.8% starting at age 65.

It's a pity that such deferred annuities aren't available in the UK, but it's just one of the failures of the UK insurance companies…another one being long term care insurance. It's an area where regulation and government intervention might be useful.

DT2001

maybe have a watch of this video as I think it asks a few good questions of retirement post 70 but also the run up to that point. It might help you with the questions you want to ask your IFA in August.

https://www.youtube.com/watch?v=zUhQYiI_NKA

middlewife

https://forums.moneysavingexpert.com/discussion/comment/82046535#Comment_82046535

Thanks, but play button doesn't work? It's just an image….. edited - refreshed screen and all OK thanks

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82046535#Comment_82046535

Some useful content, but when you see a picture of a guru with a voice over with some strange tempo shifts ask yourself if it's AI.

tigerspill

My current plan has three buckets, Cash, ILGs and equities. Maybe in 10-15 years I will try to understand Annuities better with a view to that for the longer term in my dottage.

middlewife

There are quite a few comments below the video suggesting this is AI; not necessarily a bad thing, BUT my OH ( who fervently believes in AI) ran figures through AI which initially suggested we'd be very well off in retirement. Immediately suspicious I questioned exactly what information he had given the AI tool. Turns out that he'd not specified two critical aspects

1. The AI had given average forecast figures for a level sole life annuity, when we require RPI linked joint lives, so the figures dropped massively once he'd rerun the search and
2. schoolboy error - he'd just told the search to use the entire pot ( assuming it would "know" somehow to deduct tax) - not deducted basic rate income tax and disregard the tax free lump sum, so the figures dropped even lower, but to a level I had expected

Moral of the story - AI is only as good as the people who programme it, if I'd not questioned the results, we'd have been in for an awful shock 5 months from now……

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82047452#Comment_82047452

My issue with the video isn't so much the content, but that it is presented as wisdom from the real Warren Buffet. There is still a definite sameness and style to these AI videos which is obvious after you've listened to a few of them. There's a lot of similar stuff that uses the likeness of the physicist Richard Feynman.