Author Topic: Pension ideas  (Read 6043 times)

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Offline suehugh

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Pension ideas
« on: February 26, 2015, 17:29:29 PM »
We have a pension pot to sort out. Not big.
Not sure what to do
Aged 60
Female.
Fixed annuity for life. (Reducing in real value because of inflation)
Life annuity, but linked to inflation. Starts off low, low.
Checked all the comparison sites and rang some companies. Think we have a good deal if we choose this particular route.
OR
Income drawdown. Defer pensions and just draw fixed amount each year within tax allowance. Look to invest in fixed bond or higher interest current account, or probably spend it.

Any thoughts from CBF Finance gurus



Offline Ian

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Re: Pension ideas
« Reply #1 on: February 26, 2015, 17:49:01 PM »
Just make sure you remember any health issues you have had - as I went through the process about 3 years ago and although I have been in good health for most of my life and I knew poor health got you a better rate - I decided to mention - at the last minute to a "specialist broker" who had e-mailed me out of the blue - that I had a serious illness which paralysed me completely for a whole year aged 21 followed by 2 years learning to walk / move again but I was fully recovered and had been for 30 years    :)

The outcome was a 15% increase in annuity payments!

Offline Colwyn

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Re: Pension ideas
« Reply #2 on: February 26, 2015, 18:39:10 PM »
The annuity I got (before the possibility of taking the money out and doing what you like with it) gave a range of possibilities where you could set your own inflation parameters - eg. 0% (gives fixed rate), 2% (gives a bit less to start with but you get an annual top up), 5% (even lower rate at start up but a bigger buffer against inflation), and so on. One factor to consider is the impact of your state pension start date. When does yours kick in? That's how long you have to live on the annuity/investment alone. It may only be worth £500 a month and not enough by itself but it would sure boost what you can get from a £55k annuity.

P.S. You also have to calculate how long you intend/expect living - just to look on the bright side.

Offline Steve (redding43)

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Re: Pension ideas
« Reply #3 on: February 26, 2015, 19:45:05 PM »
With the pension changes coming you need to be very careful. The first question should be...what do you want in your retirement. Are you looking to continue to work or pass on an inheritance or are you looking to have a steady income. Also do you have any property.

Lots to learn and you need to be very careful as things like drawdown could very much work for you but the flip side is you get hit with a hefty tax bill. Balancing between the two, taking advantage of your tax allowance and investing for income might be another options but, as I say, it depends on what your plans are.

Personally I would recommend you take advice and not from a turkey forum. If you go here http://www.pensionsadvisoryservice.org.uk they are offering you a free consultation and are government backed. They can give you some facts about your options and put you in touch with a adviser if you would like to take the discussion further.

Hope this helps.

Why do I know some of this? Well I head up a online marketing team for a large wealth management company and we are about to launch our Campaign around this, look out for us in the Telegraph and Mail. The choices are complex, the risks are also high which is why any cost of advice could save you money in the long term.

Good luck with your retirement and your future plans

Offline suehugh

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Re: Pension ideas
« Reply #4 on: February 26, 2015, 21:16:13 PM »
Hi Colwyn
Sues pension can kick in end of March, or she could defer to take further advantage of the new rules.
The only benefit I can see from the new rules would be that Sue could get her mitts on all the pot tax free
25% is already tax free.  The balance she could take over 5  years in lump sums not subject to the tax threshold. But what the heck do you do with the money. Invest yes, but Sue loves to spend. Returns on secure investments are not currently great.
The annuity would pay out the same amount but over a 20 year period. It would of course continue to pay out after this time .
The quotes for inflation linked were just silly. Plus I suppose our thought is the more money received at an earlier stage is more usable when we are fitter and younger.
Thanks for your input

Offline suehugh

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Re: Pension ideas
« Reply #5 on: February 26, 2015, 21:33:13 PM »
Hi Steve
We have already gone the advice route and actually had a skype type meet with an F.A.
He quoted a fee of £1300.0 which we thought was a lot. We know that there would also be additional fees
For instance, Sue has 3pots with three providers. We offered the total to each of them and ended up wth the best quote from a completely different alternate.
In each case there was a set up fee varying between 1 /1.5 % but included in the figures.

We using the Forum as a sounding board on this question Steve, and sometimes a bit of outside input can be  helpful.
We certainly wouldn't sue the Forum for mis selling as Scunner would never pay.
Good luck with gearing up for the new era in Pensions.

Offline JohnF

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Re: Pension ideas
« Reply #6 on: February 26, 2015, 23:11:29 PM »
Put it all on red...

JF

Offline villain

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Re: Pension ideas
« Reply #7 on: February 27, 2015, 12:44:18 PM »
I am involved with this area and am actually authorised to give advive. In the past the "choice" was to buy an annuity. Annuities are now widely seen as poor value, due to low interest rates and longevity.

Added to that, the "fund" died with you.

There are now multiple options, and they can be quite complicated.

Yes, it is true that using Income Drawdown you could effectively strip out your fund tax free (assuming you have no other income), but why should you do that? The money is already in a tax-advantaged environment plus the death benefits could well be better where it is now.

Obviously I am not going to offer specific advice because I know virtually nothing about you, and what you should actually do is dependent on your personal circumstances and attitude to risk.The thing about paying for advice (the fee was not unreasonable IMO) is that you know that you will have had all options assessed and you are also protected if something goes wrong. If you DIY it, it could end up costing you far more than the 2%ish you've been quoted and you have no comeback if you make a mistake. It is also essential that you deal with an INDEPENDENT Financial Adviser as somebody working on behalf of one or a limited range of firms may not have all the options available.

The changes that have been brought in and continue to happen are designed to move people away from annuities. As far as I'm concerned, and I can only talk about me, there is no way on earth I would buy an annuity.

Offline suehugh

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Re: Pension ideas
« Reply #8 on: February 27, 2015, 17:30:07 PM »
Thanks villain.

We have just made an appointment with an FA to discuss. Still thinks it's costly, but we feel  unqualified
To make a decision on our lonesome.
Hugh

Offline Andrew H

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Re: Pension ideas
« Reply #9 on: March 01, 2015, 12:43:07 PM »
I have to agree with Steve and villian about getting independant financial advice.
As a retired ifa it never ceass to amaze me how people can ask for "any thoughts" on such a major issue as this.
Am glad you are taking professional advice otherwise it is jst like going down to the pub and asking the guy standing next to you what he thinks!
 




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