Annuities -Please help me undestand

jstvj

Hello

I am 63 now and still a dummy.

In the early 70's I was self employed and I took out an annuity, which lasted ten years and then had to be "fully paid up" because I started PAYE work.

Also, in 1981 I again started self employment and joined another annuity,since which time I have been paying gross premiums of £50.00 per month.

Apparently, on both scheme I can elect to take the benefits before my 65th Birthday, which can amount to a tax free cash payment of 25% of the total value with the remainder being paid as a pension.

I know my first (the small one) is worth £15,500, which equates to approx £3500 lumpsum and thereafter approx £40 per month pension.

With the so called recession, it seems to me that the value of these funds is unlikely to increase over the next two years and therefore, if my thinking is correct, I may as well claim the benefits now instead of waiting to 65.

Am I right please ? and is there anything else I should know ?

Thanks all

nrsql

Well you would get more at 65 than at 63 due to the expectation of how long the annuity will be paid.
Looking at
http://www.moneymadeclear.fsa.gov.uk/tools/compare_products.html
It gives £94 @ 65 years old against 90 @ 63 so you might be right - depends on how the rates change in those two years though.

I take it you will be taking advice and are just here to get information?
I'm sure knowledgable folk will be along shortly but be careful about the conditions on these pensions. Do they have any guarantees?

EdInvestor

Very importnat to check whether these retirement annuities have Guaranteed Annuity Rates (GARs) which can be much higher than normal annuity rates.

jstvj

Thank you for your advice. I have read the policies but a lot of it is gobbledigook (is that how you spell it. I know there are references to guarantees 0,5, & 10 years but didn't understand what those options mean.

Even though somepeople would regard my annuities as peanuts, I gather that my best course of action is to seek out an independent financial adviser ?

dunstonh

I gather that my best course of action is to seek out an independent financial adviser ?

Without doubt. RACs often have terms which may only apply on certain ages or if a certain income method is taken. These can be quite valuable and if you get it wrong there is no changing it. Once the decision is made and in force then it is cast in stone for life. You need to get it right first time.

dgbshifnal

It's worth asking someone who knows.
After a number of questions here - mostly answered by dunstonh - I finally went to an IFA.
within the first ten minutes he identified that a Scottish Widows plan I held, which I thought had a guaranteed rate of 4% (that was the only figure I could see on any of their paperwork) did in fact have a guaranteed rate of 9.8%.
Not knowing that couold have cost a great deal more than the IFA is charging me - an initial fee for doing a comparison, followed by fee and /or commission mix, whichever I prefer and extra commisssion invested back into my fund.
I'm content.

McKneff

my husband retired through ill health when he was 57.
he elected then to take his personal pensions. He wasnt allowed
to put any more in and he had the choice to take it (around £1000 per year)
or freeze it and wait another 8 years to claim it. It seemed a bit daft
not to take it. It was a godsend supplementing his long term sick pay.
He is 64 now and still gettinghis £1000 per year which adds up to £6000
he has claimed plus his 25% at the start of his claim. It definitely worked
in our favour.

like the other man said, you have to get it right first time cos there is no
going back. and always, always take your 25%

regards