annuity advice

feelingkarma

Hi
I am a male in , hopefully , good health approaching 62. Made redundant two years ago.

I am now self employed but business is slow however I have not had to dip into my savings as yet , but it gets very , very close each month.

I have a sum of £46,800 in a protected rights fund currently with the Prudential accrued when I contraceted out of SERPS.

I am thinking of using this to take the 25% lump sum and purchase an annuity with the remainder.

I have savings of approx. £38.000 and a mortgage of 3,000

I am not too sure that this is the best option for me....

any advice would be welcome

dunstonh

You seem to have decided it is the right thing to do.

Get an IFA out to see you. Even if the pru option is the best option, Pru will pay the IFA. If you dont use an IFA then Pru will keep the money they would have paid the IFA for themselves. Last few Pru annuities havent come out best priced for me so it should be worth it for you but you have nothing to lose.

feelingkarma

You seem to have decided it is the right thing to do....

I thought that I had but now not so certain....I might be looking at short term gain.

If I do go ahead I will not keep it with the Pru , even with my limited knowledge , a short trawl of the net has pointed me to better providers.

they would have paid the IFA for themselves

Thanks , I didn't even know that , with appologies to any Advisers , how does one go about finding an IFA you can "have faith in"

dunstonh

I thought that I had but now not so certain....I might be looking at short term gain.

There are pros and cons. Currently the money is sitting in a tax free investment. Once you commence it, the death benefits are reduced and you are buying an annuity at a younger age than anticipated. Annuity rates have been creeping up in the last few years so whilst it may have been a good thing to start early 5 years ago, it may not be now. It is going to be a judgement call only you can decide. One alternative option is to do an unsecured pension where you take the 25% tax free but leave the rest invested until you are ready to take an income. again pros and cons may exist here but it is a valid option.

If I do go ahead I will not keep it with the Pru , even with my limited knowledge , a short trawl of the net has pointed me to better providers.

Dont count on that being right. Whilst they havent been as good recently, for non smokers they do still tend to come out 2nd or 3rd. Older pru plans may have guarantees. So, keep an open mind.

Thanks , I didn't even know that , with appologies to any Advisers , how does one go about finding an IFA you can "have faith in"

Open market option is one of the areas where you dont gain a thing but not using an IFA. If you dont use one and do all the work yourself the provider keeps the commission for themselves. A transaction like this is bread and butter to an IFA and we can do them with our eyes closed. It must be an IFA though and not a tied agent and its probably best to avoid a salesforce. www.unbiased.co.uk is the UK database of IFAs. Stick your postcode in and find your nearest small firm.

EdInvestor

dunstonh wrote: »

One alternative option is to do an unsecured pension where you take the 25% tax free but leave the rest invested until you are ready to take an income. again pros and cons may exist here but it is a valid option.

This idea, known usually as income drawdown, may well be the best way forward, enabling you to pay off the mortgage and get costs down while leaving most of the money to grow. Usually with pension funds under 100k, drawdown is done via a SIPP and there are a number of low cost online providers now offering this service.

eg https://www.h-l.co.uk
https://www.sippdeal.co.uk
https://www.alliance trust.co.uk

At the moment however protected rights money is not allowed in SIPPs - this is expected to change in October.

So if this idea appeals, you may be better to wait until then.Alternatively if you would use an IFA to advise on investing the money, it may be possible to move it now into a kind of sprseudo-SIPP offered by a provider called Selestia, which allegedly accepts smaller funds (I have no info on the charges however).You could transfer again later.

Do make sure there are no guarantees attached to the Pru pension if it is in With profits.

Retired_I.F.A.

"Usually drawdown is done via a SIPP" roflmao

It's been available vias a PP before SIPP's came about.

"a kind of sprseudo-SIPP"

Jeeze Ed quit the fancy latin and speak English will you please. It's a Personal Pension.

"...Selestia, which allegedly accepts smaller funds"

Minimum of £3000 as you' know full well as it's been stated on this forum many times in theads you have paticipated in.


Drawdown via a personal pension such as Selestia imo is the right choice unless you want to fix your income for life based on a measly 4.7% gilt return which is the curent interest rate / gowth underlying an annuity.

averageguy11

bit sarcy ther..maybe its yur age