Buying an annuity

There's another thread going about annuities. You may care to look at that as well.

I would ask you this, though. This internet firm that you might use, will it give you any advice, and/or do you need any advice or do you think you know all the wrinkles? What about tax-free cash? You haven't mentioned that. Do you want to spend all your fund on an annuity that might die with you or do you want the option of reviewing it all in say 5 years time? 200 could be a small price to pay for some proper advice.

Rob Graham

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Hargreaves Landsdown do a free search and quote service, not sure how comprehensive it is but worth a try...

Thanks, Rob. I did see the other thread. I'm not that bothered about the £7000 tax free cash at the moment, although that might change, of course. I guess that the continuing income is probably more important. I can do that with continuing income for my dependents. (at a lower income for us in the early stages). I perhaps should have mentioned that I have an 'impaired life' in that I have one of the least aggressive forms of cancer. (Chronic lymphocytic leukaemia) which will give me an increased income, set against a probably shorter life expectancy. I have already taken some advice - and have access to at least one independent financial adviser. I was posting here just to see what else might be added.

Thanks for your comments.

John

This is really helpful - thanks. I will take a look at that.

John

You need to decide about the tax free cash now. Once you buy the annuity, it is too late.

You could of course take the tax free cash, and use it to buy a voluntary purchase annuity, where you only pay tax on the interest element of the payment, not the full payment.

You may not need to buy an annuity at all. If the value of this AVC is no more than a quarter of your total pension pot, you could count the whole AVC fund as part of your overall tax free lump sum.

This is a very valid point. Because the taxation treatment of a PLA is different to that of a CPA you end up with a better deal.

Rob

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Indeed - the AVC and main company pension count as one thing as far as the lump sum rules go, and the value of the company pension is 20x the annual amount. So if the AVC is less 6.66x the annual company pension, you can take the whole AVC as a tax free lump sum. AIUI. May depend of the scheme rules.

However - PLA's give worse gross rates because only people with good life expectancy will buy them (since anyone in poor health etc will just spend the cash or get an impaired life annuity). Therefore they are based on a longer life expectancy than CPA's, which people are forced to buy.