just about to withdraw 25% and buy an annuity, im with the prudential. any advice on who to choose ?

cheers guys, you could save me hundreds or even more to spend on bike stuff 🙂

is this a troll ?

see https://www.pensionwise.gov.uk/

http://www.telegraph.co.uk/pensions-retirement/annuities/should-wait-higher-annuity-rate-thanks-donald-trumps-inflation/
“Annuity rates hit an all-time low in the months after Britain voted to leave the EU. At the end of August a £50,000 pot would have bought a “level” annuity, which does not rise with inflation, paying £2,343 a year, according to Retirement Advantage, an annuity firm.

By the end of November, average rates had increased by 11pc, meaning that the same £50,000 now bought you £2,591 a year.”

https://www.hl.co.uk/pensions/annuities/annuity-best-buy-rates

I’d do a lot more research than asking here and the Pru

no its not a troll, thanks for that.
ive looked at pension wise and trawled the internet as you have kindly suggested.
but now my mind is clouded with too much information. ive filled in lots of annuity calculators from different companies. im asking on here basically to see if anyone has made a wrong choice and why and whether there is something obvious ive missed. its a big decision ALL advice at this time is welcome.
Lester

Well, I’m going to be looking to buy another one myself, having just retired, but fortunately I can wait for a year or two for interest rates to get a bit more attractive…

As far as “which one”, you’ve done all it takes for research by the sound of it. It’s just a matter of which one gives you the best bang for your buck, but this is probably worth a look:

http://www.moneysavingexpert.com

Annuities are expensive, drawdown could give you a higher income but at higher risk. The cost of an annuity is because of the guaranteed income – they invest in very low risk securities (gilts mainly) and those securities are yielding very little because everybody wants them right now.

The only thing to choose between annuity providers is how much they will give you. Sticking with the Pru is likey to be expensive.

You yourself need to think through whether you want any guarantee period, spouse provision and index linking. If you have any serious health issues, make sure you look at enhanced annuities.

There are not that many annuity providers any more, it is not as popular now pension freedoms are in place. Going to each one shouldn’t take too long. You could also consider an IFA – odd as it sounds some get better deals than you will so that you actually end up better off even after paying their fee. Some will also cost you a pretty penny and leave you worse off.

I’m in much the same position as you (read and internetted up, not clear on the best option), however I have decided not to do an annuity at initial retirement (and I appreciate your circumstances are likely different to mine) as I don’t think annuities are a good solution at this point in time (v low rates) and I **guesss!!?** they will go up, (partly as I will be older and partly as I think rates will go up)

I’m 10 years off, and don’t envy you making the decision at the mo – although will it be any better in the future?

http://citywire.co.uk/money/annuity-rates-have-fallen-again-heres-why/a613214

Also, you might want to think about improving it’s buying power by retiring to somewhere where life is cheap and there’s more sunshine…

ive spent the last two hours doing more research, last year when i was considering retiring i was sent a pack from the pru i was given actual amounts for different annuity options etc.
this year they have just sent me the value of my pot.i am reluctant to pay charges but am not sure if i ask them anything at all would that be considered advice and therefore charge me a fee? if i just tell them what i want, say, 25% out and an annuity, will they then charge me a fee? i have also read that Prudential will not let me withdraw unless i have financial advice?
i am more or less sure i want the 25% lump sum and then a full term annuity. if i leave it another year i doubt there is much chance that the fund will grow more than the value of the annuity payments i would have received and the 12 extra payments i would have made? and there is a real chance the fund could go down, i just need to check that the mvr doesnt apply on the day i take it.
i intend to get an appt with pension wise on monday. i will keep following this thread and add my thoughts and findings as i go through this process.
thanks everyone

So much more information needed (financial & personal) to understand your best course of action.

Its a very personal thing, as others have mentioned it would be more ideal to wait as annuity rates are pathetic at the moment.

I used to work for Aviva in the Annuity team many years ago, although we weren’t financial advisers we just provided the facts to aid choices.

Prudential could be on about the financial advise is required if you wish to fully withdraw all your funds, taking a 100% lump sum but with large tax implications or if opting to take things like an income drawdown as they’re both very big decisions to make (so too as an annuity, but less risk and easier to understand).

Your best course of action is to seek some advice, or risk it and go it alone but I certainly wouldn’t take much from comments on here considering anyone that might suggest something doesn’t know your position in anyway which is crucial.

I was in a similar situation , I had a total pension fund and had to decide between buying an annuity or transferring into one single drawdown fund.

I know the cost of an IFAlooks a lot, and it is, but I don’t for one minute regret paying my IFA his initial fee and the ongoing single fund fees.

I opted to transfer into one drawdown fund, with the risk to the pension fund spread across about seven investments.

Annuities are very low and poor value for money at the moment, plus we don’t need to access the money right now.

A drawdown fund is yielding very good return with middle ground risk at the moment.

A good IFA is very well worth the charges.

OP, have you checked to see whether you have a Guaranteed Annuity Rate with the Pru?

While Annuity rates are poor at the moment compared to Drawdown products, don’t (as my Actuary friend reminded me) underestimate how long you or your spouse/partner etc. may live for – the upside is they keep paying out until you/they croak it!

Just had a look on one of the annuity calculators….

£100,000 fund, take out £25,000 tax free, leaves £75,000 fund

Something like £1,800 per annum !

Does include a 75% allowance for my wife if I die before her though.

You would have to live a very long time for this to be worthwhile, and £75,000 of your money is gone.

Drawdown has to be the better option for most people, surely?

While Annuity rates are poor at the moment compared to Drawdown products, don’t (as my Actuary friend reminded me) underestimate how long you or your spouse/partner etc. may live for – the upside is they keep paying out until you/they croak it! [/I]

Agree, but also bare in mind how little you’ll need when really old and (on the otherside of the coin) will it be deem as ‘savings’ if you go into care?

I asked a similar question a year ago and had an email from a pension expert based near Glasgow who is on this forum and rides bikes. He came down to Stafford, we went for a ride on Cannock Chase and he sorted me out with some great advice. I now have my SIPP with his firm. Highly recommended. Wait for him to make contact. If you hear nothing, let me know and I’ll contact him.

Thanks for raising this Lester. I’m 10 years away and despite saving loads this scares me.

You would have to live a very long time for this to be worthwhile, and £75,000 of your money is gone.

Breakeven on most annuities is in your 80s. Which you would expect because that is the typical life expectancy. Gilt yields are around zero in real terms so there is no growth (in real terms). Annuities also make next to no profit, which is why there are far fewer providers than there used to be.

Drawdown has to be the better option for most people, surely?

It depends.

Annuities are really poor value at the moment but drawdown takes more work to manage (either time or cost) and has the risk of running out of money. Properly done, you should never run out but there is always a chance.

If you are prepared to pay for it, or take the time to do it yourself, drawdown is a more fruitful option. Risks can be managed, but it means your income may fluctuate and you may run out of money. You can also do a UFPLS to spread your 25% over time rather than take it all upfront if that suits you.

You have my sympathies it really is very confusing. I have a small pension pot i dont really know what to do with, main pension pot is my btl flats plus some db. As i m some way off i m so pleased i preinvested in the flats when i could. I know property is way overvalued but i will buy another when i can afford it.

My direct dabblings in stocks is producing 5% pa divi yield, so im seeing this as a practice run before i scale it up.

It also doesn’t help that those of us who aren’t in a final pension scheme are MORE restricted on how much we can actually have in our pension ‘pot’ to achieve the same annual pension – probably by a factor greater than 2.

Slight thread hijack but how much income do you think you will need in retirement? Assuming mortgage and dependent free, looks like theres a bit of a time bomb heading most peoples way.

Sorry to repeat myself but it is worth asking whether a GAR might apply to your Pru pension. My pension provider sent me yearly projections based on their standard annuity rates.It was only when I asked that they told me that a GAR applied with a much higher payout.

Slight thread hijack but how much income do you think you will need in retirement? Assuming mortgage and dependent free, looks like theres a bit of a time bomb heading most peoples way. [/I]

Why assume mortgage/rent free, how many pensioners currently rent?

http://www.express.co.uk/life-style/property/686161/Number-pensioners-renting-soared-220-000-last-four-years

Gosh thats frightening. My tenant profile has aged actually, seems q normal now to rent in your 40s. Saying that i know a few retirees here in spain renting having sold up in their home countries.

My plan is certainly drawdown instead of annuity. I have a mix of state pension and an RAF pension from 65 as a backstop though.

As squirrel has suggested if it’s an old pru plan (you mention MVR so you’re in with profits which is very 1980’s!) then guaranteed annuity rates or guaranteed minimum pension may apply which could be very valuable. You also mention they won’t let you do what you want without advice which suggests you have some sort of protected benefit so worth exploring your current plan before looking around at annuities elsewhere.

this year they have just sent me the value of my pot.i am reluctant to pay charges but am not sure if i ask them anything at all would that be considered advice and therefore charge me a fee?

Pru won’t charge you a fee for asking questions of the planyou already have with them or for various quotes/retirement packs.

Drawdown vs. Annuities is completely dependent on your circumstances (other assets, personal situation, tolerance of risk etc). Impossible to say what is best for you. Again, as someone else mentions if you have any underlying health conditions then look at enhanced annuities, but explore your Pru plan first.

FWIW Just had an update through from one of my ‘cash’ pensions.

They’re currently estimating needing £38k saved for a £1k pa pension at 65 y/o.

So, in todays money work out how much pension you’d need/want, minus the state pension (circa £8k) and then work out how much you need to save…

The best advice I heard was to move to Glasgow or Blackpool and take up smoking and drinking just before you get an annuity quote 😉

With high blood pressure and a family history of heart desease I cannot see me getting much return from an annuity.

My rough plan is to save as much as possible which is currently being helped by the funds 25% growth, recover as much as possible tax free and when its gone (on the slim chance I survive) become a burden on society.

Somewhere cheap and warm may also be in this plan.

Indeed there is — most folk I know in their 40s and 50s have no pension provision at all.

Personally I am going at 60 in 4 years come what may. We ( me and t’missus) will be poor pensioners but time rich. We have an income now of around £50 000 between us and will have around £20 000 ( maybe a bit less) when we retire until 67 when we get a bit more with the state pension ( made up of bits of pension schemes and rental income)

I don’t care that to most folk thats not enough. I have met too many people who retired at 65 to become dead or disabled within a year. I have lots to do when I retire. I will continue to work part time in the winters to top us up a bit

is this a troll ?

What a stupid question!

IRATS but I will tonight as this place is always extremely good at this type of thing! I am also very much focused on pensions as I have around 8-10 yrs before I would like to retire so the next few years is crucial.
I have an interest in finance and investing and read Economics years ago at Uni so I am quite familiar with the concepts but that doesnt help if you only have a small amount of capital. One thing I did only learn recently was that if you withdraw a tax free lump from your pension at 55 (which I had planned to do to reinvest in a place that would provide me with growth and a tax free income when I retire) then you may be severely limited in the amount that you can invest in subsequent years. I understand it is £10k pa post withdrawal but that may be reduced significantly in the next few years which is a real blow, if like me, you were planning to work for another 5 years after. Even £10k tax free per annum is a small amount given those years will be mortgage free, and the amount going into my pension would be at its greatest. Something to be aware of if you plant to withdraw at 55.

Personally I am going at 60 in 4 years come what may. We ( me and t’missus) will be poor pensioners but time rich. We have an income now of around £50 000 between us and will have around £20 000 ( maybe a bit less) when we retire until 67 when we get a bit more with the state pension ( made up of bits of pension schemes and rental income)

So at current rates you’ll have not far off £35k at 67 y/o – not poor really especially if not paying rent/mortgage.

We will be OK at 67 but at 60 not so much. Those are the years I intend to walk around the world tho so it will have to be on the cheap