Best Options?

Elmer_Dudd

A relative has just had a letter regarding his pension options.

He has a pension pot of £29860 and is being offered and standard lifetime allowance at retirement date is £165k

1)Annual Pension of £2253
Spouse would get £1126
2)Tax Free sum of £8700
Reduced pension of £1548/Spouse would get £1126
3)Open Market £29860
4) Tax free sum of £8701 and open market option of £21159

There are other posers such as a line in the letter saying the pension is only guaranteed for 5 yrs-what does this mean-surely it is for the rest of the pensioners life??

Are these offers good or would he get better on the open market?

Any help appreciated,
Elmer:cool:

dunstonh

There are other posers such as a line in the letter saying the pension is only guaranteed for 5 yrs-what does this mean-surely it is for the rest of the pensioners life??

There are a range of options available when purchasing an annuity. Increasing or level. Guaranteed for upto 10 years (5 is common default) or no guarantee. Including spouse or not. With or without proportion, capital buy back etc etc.

If you get a illustration for the annuity from the pension provider they will usually show some of the options but not all. Many do not actually offer all the options meaning you would need to use the open market option or transfer to get the benefits you want.

The guarantee is a minimum. i.e. if he dies in the first 5 years it will pay upto the end of year 5. It will continue to pay after 5 years but if he dies in year 10 then it will cease as the guarantee period has passed.

It costs nothing to get figures on the open market option so it is worth looking.

Elmer_Dudd

Thanks Dunstonh-do you recommend any firm/sites to look at?

Elmer:cool:

shown73

Elmer, I think you're in pretty much the same boat as we are, if you check out my thread on buying annuity, just above. An awful lot of people are going to have to face this in years to come.

dunstonh

Elmer_Dudd wrote: »

Thanks Dunstonh-do you recommend any firm/sites to look at?

Elmer:cool:

You can either look yourself or you can get an IFA to do it for you. A number of providers will only deal with IFAs. Especially those who offer smokers rates or enhanced rates based on health.

There are some online sites that just pull snapshot example data from the FSA tables but they are not accurate enough to base a once in a lifetime decision on.

Elmer_Dudd

Thanks-getting them in touch with a local IFA to get the best deal.

Elmer