Income drawdown vs annuity purchase at retirement

EdInvestor

http://www.ifaonline.co.uk/public/showPage.html?page=ifa2006_articleimport&tempPageName=448379


Here's another one of these drawdown/annuity guarantee- plus- growth combo products: still expensive but a bit better than the earlier ones.

More competition in this market should be helpful in bringing down prices, as is happening with equity release, but it takes time.

Browntoa

as the first post MAY be lost, copied from cache

<board guide edit: Given that this thread has been highjacked to become another "income drawdown/annuity purchase" discussion, I have split it into two threads. Please try and stay on-topic this time.

Pal>

Pam

As of next year you won't have to buy an annuity.Instead you can keep the fund invested and take an income from it when you retire.This is called "income drawdown". Later you should be able to leave this fund or what's left of it when you die to your heirs ( though they haven't quite figured out the tax aspects yet.

IMHO, as long as it's correctly invested and you don't take out too high an income, income drawdown can be a better bet especially for women, who tend to live a long time and get !!!! annuity rates compared with men.Although some people will say it is risky - as the value of an invested fund can go down as well as up - with an annuity, inflation eats away at the value and in 20 years its spending power is halved. Not so much a risk as a dead cert that the older you are, the poorer you'll be.

Last edited by Pal : 14-07-2005 at 1:51 PM. Reason: Explaining thread split

EdInvestor

Speaking as the starter of the thread, why don't you bin this one?The issues have been covered elsewhere since.

There are a few other stickies in this forum that are past their sell-by date IMHO as well.

Sailor_Sam

Not aware of 'income drawdown'. would it help me in the future to save losing means tested benefits.
i am 54, on long term sickness. i get IB, couple of pounds IS, and lowest rate DLA. i have a pension pot of £20k which i've thought i may 'cash in' taking £5k, leaving the balance till i reach 65. i think this may give me about £20pw. this may mean i will lose my IS, although only £2, there is all the other extras that go with it. just seeing about income drawdown, i wonder can i use this so that my future income, from my pension, can be kept to a lower figure to enable me to get means tested benefits.

dunstonh

Not aware of 'income drawdown'. would it help me in the future to save losing means tested benefits.

Probably not as its just a different way of paying an income. It is still income whatever way you do it.

Retired_I.F.A.

I think income support is the only benefit you get that is means tested so having the tfc max of 5k will effect it as would an income from a pension above £20 p/wk.

By going into drawdown you can control the income and thus keep it under the £20 mark but to ensure you keep the income support the cash you have available needs to be under 3000 so spend 2000 in a mannor that the DSS would not consider as spent solely to get income support.ie: house repairs not holidays.

Google "income support" theres a helpline number somewhere where the DSS answer any queries and "what if" scenarios and get confirmation as I may be wrong, it's been a long time since I rang them.

EdInvestor

Another guaranteeed drawdown product, this one from Aegon/ScotEq.

http://business.scotsman.com/personal-finance/Retirement-choices-are-on-the.4094005.jp

The Pru and Standard Life are also said to be preparing options.

McKneff

phew, this all very confusing for us who just want to retire gracefully.
i anm a 58 year old woman (who is only 35 inside) who thought draw down was just for managing director salarys, but you have all explaine everything brilliantly. what can i expect in 2009 with a fund of just 50.000
under the annuity bit i was expecting a lump sum of 12.5k and a pension of
40.00 pounds per week,

EdInvestor

Here's a useful comparison of how much you might get from drawdown vs, various types of annuities.

http://www.thisismoney.co.uk/retirement/article.html?in_article_id=443548&in_page_id=6

Retired_I.F.A.

Useful as a fridge to an eskimo as it's written by idiots
.