Income drawdown vs annuity purchase at retirement

h5djr

There is a new product coming out soon from a very big company. It is designed to sit between Drawdown (ASP) and Annuities taking the best from both contracts.

Any further news on this product?

David R

dunstonh

Its possibly the Aegon Scot Eq 5 for life product.

http://www.5forlife.ie/index.htm?WT.mc_id=5forlifepartner

EdInvestor

G R O A N. What's new about this product? It appears to be another type of investment bond.:rolleyes:

I suppose you could say at least it's a bit more honest that the usual ones: it does at least indicate (more or less) that the income comes from your capital and your capital can run out.....

But no doubt it will be subject to the same IB disadvantages of high charges and taxes.

whiteflag_3

EdInvestor wrote:

G R O A N. What's new about this product? It appears to be another type of investment bond.:rolleyes:

I suppose you could say at least it's a bit more honest that the usual ones: it does at least indicate (more or less) that the income comes from your capital and your capital can run out.....

But no doubt it will be subject to the same IB disadvantages of high charges and taxes.

Its certainly not a pension.

Ed im meeting our Scot Eq rep tomorrow to grill him on this new product, anything youd like me to ask ?

Ps this is a genuine offer!

EdInvestor

It appears to be an offshore product?

One thing I have been wondering about is what product they are going to come up with for the tax free cash for people who are moving to drawdown instead of an annuity. After all, a properly constructed drawdown ( if that is what's being sold in eg the Standard Life SIPP) should make some people ask a few pertinent and possibly difficult questions about the structure of IBs.

Might this be some kind of dressed up version of an IB with a new name to get around that problem?Is it aimed at the TFC?

Interested to hear any info you can ferret out.

whiteflag_3

EdInvestor wrote:

It appears to be an offshore product?

One thing I have been wondering about is what product they are going to come up with for the tax free cash for people who are moving to drawdown instead of an annuity. After all, a properly constructed drawdown ( if that is what's being sold in eg the Standard Life SIPP) should make some people ask a few pertinent and possibly difficult questions about the structure of IBs.

Might this be some kind of dressed up version of an IB with a new name to get around that problem?Is it aimed at the TFC?

Interested to hear any info you can ferret out.

my initial thought was that it is aimed at current With Profit bond investors .

Will post findings

cheerfulcat

EdInvestor wrote:

G R O A N. What's new about this product? It appears to be another type of investment bond.

This doesn't look anything like an investment bond. It looks like an annuity except that you can get your money out again.

Edit: Just got to the charges. Good grief!

dunstonh

1 - it isn't an investment bond and doesn't share any characteristics
2 - it is expensive but that is not unexpected in plans which carry guarantees - you pay for that guarantee
3 - it appears to be targeted towards those that like the advantages of drawdown but not the risk. Again, that would make it more expensive compared to a DIY drawdown.

EdInvestor

About all you can say for it is that at least it's an improvement on the scam product of the century - the With-profits annuity ( give up your capital, AND take the risk, who'd have thought anyone would actually buy into that?).

At least you can cash this one in, even if they will do a Crowbar on you charges wise.

dunstonh

the With-profits annuity ( give up your capital, AND take the risk, who'd have thought anyone would actually buy into that?).

Ive seen some pretty good WP annuities over the years. When placed with Pru and a low target growth rate used, they have beaten indexed linked annuities. Not my cup of tea but they have done well when used correctly.