Income drawdown vs annuity purchase at retirement

dunstonh

Also, a number of countries have forced annuity purchase or similar arrangements.

EdInvestor

bendix wrote: »

The idea of a government forcing you to hand over your pension pot to an insurance company in return for some paltry return (which most of us could beat as amateur investors) and then losing those funds is scandalous.

Things have changed.There is now something called an "Alternatively Secured Pension" which you can take out at age 75 instead of an annuity.When you die the fund can be left to your spouse who can continue to operate the ASP, so annuities are not compulsory and more.However any remaining fund on the second death is subject to very high levels of taxation, such that only around 20% will remain in the estate.

The ideal arrangment IMHO is for income drawdown to continue beyond 75 (but without a nil income option) and then for any remaining fund to be available to the estate on death after deduction of 35% tax. It is fair to pay back tax relief received, but there should be no need for penal tax, now that the amount of relief has been capped by the lifetime allowance. It is reasonable IMHO for the Govt to require people to take a taxable income, rather than use a pension as a form of tax relieved life assurance, a current loophole exploited by many well off people.

What other country forces annuities onto people?

None AFAIK, but as mentioned, annuities are no longer compulsory here either.

Paul_Herring

Having read a certain paper that has, allegedly, asked for opinions on this forum, I've yet to see any requests from *established* member on these fora appear in a national paper.

Not that I'd think that a celestial body, the thing above my bathroom sink, or a postman would stoop to such things..

tartanterra

I have always made my own investment decisions and wherever possible, used execution only services who refund commission. I spread my investments around, and I review them every couple of months.
The positive aspect of income drawdown - for me - is that it allows you a degree of control over your own money.
I certainly don't advocate it for everyone, but personally, the satisfaction of having my money under my control outweighs all other factors.
There appears to be a lot of "experts" on this thread who seem to know what's best for everyone else. The whole point of personal investment is making a well researched and informed opinion on what is best under your own personal circumstances.
It's refreshing to come on this website and be able to be able to share my thoughts on what works personally for me, but I do find, looking through this thread that some people are just using it to "railroad" others into their way of thinking. I can't see how trashing someone else's opinion is constructive.
Surely, annuities are right for some, and income drawdown is right for others?

geoffH

Should I cash in my pension now for a cash lump sum and pension or wait a while? How often does the cash in value change. The quote I have received is valid for 30 days, is it likely to change after that?

dunstonh

Should I cash in my pension now for a cash lump sum and pension or wait a while? How often does the cash in value change. The quote I have received is valid for 30 days, is it likely to change after that?

Values change daily. How much will depend on where you invest. The annuity rate given will be guaranteed if you do it in that 30 days but the fund value wont (although some with profits funds will).

bendix

dunstonh

A slight sidetrack . .As I might have mentioned, I will retire to Thailand long before I am 55. I have recently seen adverts in the thai expat press from financial planners saying that if you have a personal pension fund in the UK you are forced to buy annuities or USPs, BUT if you now live overseas it can be unlocked and transferred.

Do you know anything about this.

One of the ads was from Montpelier Finance who, I think, have a decent reputation globally.

dunstonh

bendix wrote: »

dunstonh

A slight sidetrack . .As I might have mentioned, I will retire to Thailand long before I am 55. I have recently seen adverts in the thai expat press from financial planners saying that if you have a personal pension fund in the UK you are forced to buy annuities or USPs, BUT if you now live overseas it can be unlocked and transferred.

Do you know anything about this.

One of the ads was from Montpelier Finance who, I think, have a decent reputation globally.

I dont really deal in that area so only pick up little bits here and there. I have heard there are quite a few scams operating in that area. So be on guard.

EdInvestor

Be aware that HMRC has cancelled all arrangments in Singapore relating to UK pension transfers via the "QROPS" scheme.

wolverene

Advice needed please. At the moment I have a pension pot of £83000 ( it was £122000 back at the start of August but, as we all know, the market blew apart) is it advisable, in the current climate, to think of taking the 25% tax free allowance and putting the remaining £60000 into a drawdown pension or should I go for an annuity? The advice given by an IFA is to go for the drawdown with Scottish Life and he states that the aim of the management would be to get at least a 5% growth after fees so as to protect the initial fund, assuming I took £5000 out each year as pension- he says this would be the worst case scenario- but with the potential for higher growth. I am concerned that my initial investment could disappear. The expert unbiased view would be appreciated.
Thank you