Annuities - where do you think rates are going?

ali_bear

If you were nervous about the stock markets note that you could move the intended funds out of shares-based into a gilt-based investment fund (see above) relatively quickly, while setting up an annuity is likely to take a couple of months, even if you were to get a quote today.

SVaz

Which Sipps allow you to do what Dunston suggests and keep the annuity income within the account?
AI gives me the answer that it’s not possible but I trust that about as far as I can spit.
When we hit State pension age in 6 years, we probably won’t need regular income from my Sipp due to my Wife currently emptying her Sipp tax free into Isas , it will be there as a backup for my Wife if anything happens to me.
A regular payment that you can choose to draw or not sounds ideal. I have a Gilt ladder from 2034-39 within a sipp that may or not be drawn but there’s also around £150k ( ignoring 5 years income in mmf that will be used from 2028) after taking the remaining tax free cash that’s currently invested 80% in a Global index fund and 20% cautious mixed asset fund.

dunstonh

Which Sipps allow you to do what Dunston suggests and keep the annuity income within the account?

None of the DIY market. It's an IFA-only thing.

SVaz

Of course it is 🙄

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82133120#Comment_82133120

However, many things used to be an IFA only thing but are now available DIY. So, it should come in time. Its just a matter of how long.

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82132982#Comment_82132982

You could just take the annuity and pay the income back into a pension, assuming you had the earnings necessary and AA headroom. This could be more efficient if you use sal sac as you'd save NI, it'd be tax neutral if you increase your conts by the annuity amount plus would likely generate more tax free cash. You'd need to watch out for the recycling rules.

SVaz

If you are retired, you won’t have the headroom

RogerPensionGuy

RPI & CPHI change data is included in the annuity quotes today.

Reference annuity rates trending up in the future is very possible and getting older ups the rates for people, if annuity rates roll down it can easily remove more value than just getting older brings to the party.

Maybe play on the moneyhelper annuity tool and see what RPI and fixed % are the same initial payout PA in year one, I just did an annuity and RPI was same initial output as 3.7% or 3.8% fixed, I though hard on a fixed 3% or 4% or RPI, I picked RPI as if we have one a few hot inflation years in the early years I would probably not be happy,

I used about 75% of my DC SIPP to buy my 1st annuity a few months ago and annuity rates have eeked up a bit and I am currently back in the decision room trying to decide if now is a good time to buy my 2nd/last annuity or just let cook in the DC SIPP and annuity later or maybe a drawdown.

Cheers Roger.

Notfarfromtheborder

https://forums.moneysavingexpert.com/discussion/comment/82132691#Comment_82132691

Interesting thought. Current thinking is retire April 28.

If i set up a fixed term annuity now (may take a few months to set up) with annual payment in arrears, so 1st payment would be maybe Dec 27 at say £30K pa could I increase sal sac from Apr 27 to 'pre sacrifice' this £30K for tax year 27/28 as currently ss to under 40% level already? Appreciate fixed term annuity triggers mpaa but i wouldn't trigger this until 1st payment, so Dec 27?

Thanks

ctdctd

OP here - thanks for all the comments folks.

Following much discussion and spreadsheeting, I have gone for a lifetime annuity at just over 6% with 3% escalation and a 5yr guarantee.

This meets my foreseeable needs and I have other funds to deploy should we suffer high inflation and / or some other crisis in the future!