Re: Big news in budget. No need for annuities !!

The annuity you get naturally depends on a lot of things - when you retire, the type of annuity etc... So for a joint life 50% with index linking retiring at 60, £100k would get you less than 3k a year. £50k would barely get that with a flat single life annuity.

Re: Big news in budget. No need for annuities !!

I retired just as the **** hit the fan in 2007 and got an 11% return on my pension pot but it was estimated that my pension pot was about 30% less thanks to G Brown imposing a windfall tax on pensions in the late 1990s

PS very good link people about to retire should read it

Re: Big news in budget. No need for annuities !!

If those figures are correct, then there will be a lot of people taking the pot of cash, and who could blame them?

Re: Big news in budget. No need for annuities !!

Here are the figures that I have looked at. They are allegedly the best returns for a £100k pot.

Age
55 60 65 70 75
Single life, level,
no guarantee £4,553 £4,961 £5,600 £6,445 £7,665
Single life, level,
5 year guarantee £4,547 £4,955 £5,585 £6,394 £7,556
Single life, RPI,
5 year guarantee £2,209 £2,689 £3,307 £4,154 £5,608
Single life, 3% escalation,
5 year guarantee £2,799 £3,182 £3,818 £4,620 £5,851
Joint life 50%, level,
no guarantee £4,286 £4,640 £5,149 £5,825 £6,782
Joint life 50%, 3% escalation,
no guarantee £2,599 £2,964 £3,367 £4,044 £5,007

Rates correct as at - 12 March 2015

In my case, I have a Joint life 50%, RPI indexed defined benefits pension that returns around 50% more than the equivalent annuity.

Re: Big news in budget. No need for annuities !!

The trouble with all retirement income planning is everyone lives too long or dies too soon.

Re: Big news in budget. No need for annuities !!

Many thanks for that Grumblewagon.

Re: Big news in budget. No need for annuities !!

I will be taking advantage of the new radical change to pension pots. I've already consulted my fa. I have two pensions, one which I'll pay until I retire, but the other one I plan to take advantage of whilst I'm still alive and kicking. I'll be 66 before I can afford to retire. Ten years away. I'm at a time in my life when I want to treat myself now.

Re: Big news in budget. No need for annuities !!

Annuities are safe but the yield is not good. I would have to hang on for at least another 20 years to show a profit.

I prefer a little risk so when I downsized I got advice. I bought a mixed portfolio of income trusts-it cost 1% of the amount invested.

Cash yield is just under 4% and in 4 months the capital has increased 4.3%.

It is a risk and things can go down as well as up. Always keep some cash reserve but for some a little risk is more (oh dear a pun coming) interesting than a Building Society/Annuity.

Re: Big news in budget. No need for annuities !!

At the moment, if you have already bought an annuity you can't cash it in, until the Govt changes the rules. This new scheme is for people almost ready to take a new pension pot.

Had I waited to take my NHS pension, for instance, instead of a year ago, I could have taken the whole amount, instead of receiving the paltry sum now of £79.90 a month. And I would have taken it all! But I wasn't getting any work from them, Payroll had closed my account anyway (I was a temporary Administrator), so I thought, ok, may as well resign fully and take the pension, and cut losses.

Now, I have no outstanding pensions. Oh, and I also receive a yearly payment of just over £700, in October. The pot was just over £18,000, taken about 2-3 years ago. Would have preferred the entire lot.

With me, I've been just that little bit late to benefit from all changes, including the larger State Pension.

Re: Big news in budget. No need for annuities !!

Dianne and I both have final salary schemes from which we already take pensions although we haven't reached retirement age yet . However, she also had a small FSAVC which she used to buy a annuity. Now she's thinking that the lump sum would have been more useful.