Pension Annuities

[ckn]

The typical annuity pay-out for a 65 year old male with a £100,000 pension pot wanting an inflation-proof pension is now down to £2256 per year.  That's down from £2562 last month.

 

Surely that's shamefully low and is nothing other than racketeering.  They've had your money for years to make profits from, they will have the bulk of it for 20+ years yet you'd have to significantly exceed the average life expectancy to just break even.

[Saint Toppy]

Annuity rates have been in freefall for 25 years. They peaked at just over 16% in the early 90's. By 98 they'd dropped to 10% and by 2012 they'd virtually halved to just over 5%.

 

It took the government a long time to realise that annuities aren't necessarily the best retirement option any more so at least you have the option now of choosing something else for your money to invest in.

Putting your £100K into a Buy to Let property would probably yield you double you annuity sum

[Griff9of13]

I'd need to live until I was 111 just to break even!

[ckn]

Coincidentally, I got my annual pension statement today for my private pension.  Overall, I made a small loss on the year, the profit was trivial then was wiped out with the 0.5% management charge.

[JohnM]

Mine is up 7.3% since Jan..after charges.  Whilst I do have a couple of small annuities as there was no option owing to the low value fund.  For my main fund, I've been in an income drawdown scheme for three years now. Much better deal and the fund is inheritable.

[Shadow]

Mine is up 7.3% since Jan..after charges. Whilst I do have a couple of small annuities as there was no option owing to the low value fund. For my main fund, I've been in an income drawdown scheme for three years now. Much better deal and the fund is inheritable.

I got at least 7% last year and 10% the year before that

I will be going down the drawdown route.

[tim2]

My pension adviser told me yesterday not to touch annuities with a bargepole.

 

They are just going to get worse as we live longer.

 

Johnoco - what you can do with your pensions very much depends on their type and when they were set up. Some of them make it very expensive if you want to exit them early - cutting up to 20% off their value. These are often the ones that aren't performing very well so a nice double whammy.

 

Gideon's suggestion of people taking out their pension and buying sports cars is laughable - the average private pension pot is £35000 i.e. bu99er all.

[ckn]

I got at least 7% last year and 10% the year before that

I will be going down the drawdown route.

I actually checked mine based on this and the pension company said that the reason my return was so low was that the annual checkpoint was at the lowest point right after the Brexit vote and if it had been delayed by two weeks would have shown a very healthy profit.

[JohnM]

can you access the fund value on line? with my income drawdown fund,I can look on line, switch funds on line FOC up to 12 times a year ( not that I have..that would be foolish for me)

 

Disclosure: there is only one thing I hate more than pension fund companies and that is butter beans   pease pudding couscous financial advisors.

[ckn]

can you access the fund value on line? with my income drawdown fund,I can look on line, switch funds on line FOC up to 12 times a year ( not that I have..that would be foolish for me)

Disclosure: there is only one thing I hate more than pension fund companies and that is butter beans pease pudding couscous financial advisors.

I can but it's always one month out of date. I'm in a good fund where my ex-employer still pays 50% of all fees up to 2.5%. I pay 1% fee (reduced to 0.5%) as I went for a self-select tracker for 95% of my payments in so I could opt out of morally iffy companies, the great thing about that was that I missed all the tanking of bank shares from 2008-2010 as I consider banks morally iffy and had no bank shares.

[Rodill Rover]

I first started taking an interest in annuities in the late eighties and remember simplifying it to £10000 p.a. per £100000 and got heavy into pension contributions with a vision of making enough of a pot for a decent pension income when the time came, naively thinking that they would at least stay there. However it appears that annuities are almost worthless.

I am currently studying the workings of drawdown income and I am fairly impressed so far, and also need to check out St. Toppy's buy to let idea as maybe part of the income. Any more ideas to consider?

[Bleep1673]

I have now a pension plan worth £31,000, next year, that is enough to get myself a buy-to-let mortgage, in a dodgy* area, (Say Yorkshire), I can then do it up to human habitable standard, (human, not Yorkie),and remortgage, and move on, & on, etc., until I am earning enough to retire on all your savings.

 

(* Sorry, I forgot I couldn't say that. XX)

[Niels]

Is it a big disadvantage taking an early work scheme pension, at 55? Does it depend on amount of service?

[Trojan]

Don't understand pensions but I have 3 (2 of which were from old jobs) is there a way of combining them all together. They're probably only worth about £10 a year anyway, I'm more curious than anything else.

I was in a similar situation in 1993. I was then using the Bradford and Bingley for all my financial stuff.  Their rep came to see me, took away documentation and returned saying no he didn't think they could be combined, oh and by the way he'd lost half the documentation.  I never used them again.

[RidingPie]

I'm beginning to think I'm lucky. As I've said before on here I'm basically self employed. When we bought our current house around 2008 the market was at a low point and I knew it would take ages to sell, so I took a risk and started renting it out. I won't say its hassle free (very far from it) and the rent doesn't quite cover the mortgage on the property (not to mention had I sold it I'd have a smaller mortgage on my main property), but I look at it as, I put some money in, someone else puts some money in and by the time I retire I'll ever have the equity as my lump sum, or say 80% of the rental income as a regular salary.

[TheDuke]

i pay in 10% of my salary and my firm puts in 11.5% i am not sure if its worth the effort

[ckn]

i pay in 10% of my salary and my firm puts in 11.5% i am not sure if its worth the effort

Definitely worth the effort by any measure.  Treat it as an 11.5% pay rise by your employer that you can't access until you retire.  Plus, unless the world really does go to pot, or you make some idiot decisions in your pension pot investment, then you'll have a substantial pot of money when you retire.  Thankfully, you don't have to use it for an annuity these days, it's just a big savings pot.

[JohnM]

My income drawdown pot is bequested to my wife. Had I taken an annuity, it would have ceased on my death unless I'd had a more omplex one that would have paid out even less than the current standard rate.

[Rodill Rover]

i pay in 10% of my salary and my firm puts in 11.5% i am not sure if its worth the effort

Be sure that it is worth it, if your monthly pay is £2000 for example you pay in £200.00 then tax relief of 20% is added making it £240.00 and your employer puts in£230.00. Every month for every 200.00 you save you are given £270.00 free.(Personally I love free money)

10 years on and you have a healthy pot to build further.

[getdownmonkeyman]

i pay in 10% of my salary and my firm puts in 11.5% i am not sure if its worth the effort

That's a bloody good employer contribution.

[clwydianrange]

Mine is up 7.3% since Jan..after charges.  Whilst I do have a couple of small annuities as there was no option owing to the low value fund.  For my main fund, I've been in an income drawdown scheme for three years now. Much better deal and the fund is inheritable.

Do you mind me asking which company you use John. I'm looking at Hargreaves Lansdown at the moment, they seem reasonable.

[JohnM]

Will send you a PM.

[Niels]

Does anyone know about Civil service pensions and taking them early at 55?

Thanks in advance.