Small pension pot of =A337000-ish. In the current economic climate. Would a non-profit annuity (smaller pay off) be the wisest option against a with-profit annuity, by a significant distance? I'm thinking that in said current economic climate any annuity that doesn't state 'garuanteed for life' might dissappear as some financial investment the annuity relies on, goes belly up.
Would be grateful for expert opinions.
Thanks.
Arthur
Who guarantees these "guaranteed for life" annuities?
Robert
They're usually invested in gilts ie government bonds. And we all know how safe they are, ask the Irish.
Who guarantees these "guaranteed for life" annuities?
Legal and General offer them.
Methinks you misunderstood the question
tim
Don't do an annuity. Put it in a SIPP, then: Do a drawdown plan - which with new legislation should become even more attractive. You can take 25% tax free cash. Use that to buy CASH ISAs with 5 year fixed rate bonds every year (layering) Excess cash into stocks ISA - Gilts funds (just like an annuity would invest) When the 25% runs out, take as aggresively as possible from the remaining pot and keep doing the same.
I see a great advantage in not doing an annuity is that you don't need life insurance, because if you die, the pot is passed on.
Governments like annuities because they don't like inherited wealth (makes for non-working 40/50 year olds). They would rather feed the bonuses of the life insurance/annuity companies' execs.
I am convinced you will extract more from the SIPP pot this way than handing it over for an annuity. I'd love to hear any arguments to the contrary.
I.E. you are convinced you will die early but can't be bothered with an impaired life annuity.
Annuities have a "death insurance" component, which means that, if you live to 112, the annuity provider is likely to be out of pocket, but with your system you may be destitute.
I have a couple of other pensions., so my aim is to empty the SIPP.
How is that comparable? AFAIK no country with its own national currency has ever failed to pay off debts denominated in that currency. If the Greeks had issued drachma debt and the Irish had issued punt debt there would not be any concerns for their solvency today. The new problem is that the foolish Europeans have confused support for Greek and Irish debt with support for the currency. They are idiots. The very best thing for the credibility of the Euro would have been to allow Greece and Ireland to default on their debts.
Tony
You can't (unless you do live to 112).
(Simply put) At any one time, you must always leave (theoretically) enough money in the pot to buy you the annuity that provides the same income that you would have got at the time you retired. (Though it's more complicated than that and they are *considering* changing rules so that you only have to leave enough to buy a "sufficient" pension, but most people wont have a big enough pot to notice the difference here!)
tim
Try Argentina and Russia.
Or does declaring the currency worthless and issuing a new one not count as "not honouring debts in that currency"?
tim
AFAIK Argentina never declared any currency worthless; the ARP peso was convertible into ARA australes and australes were convertible into ARS peso. Hyperinflation and not government decrees debased those currencies. The beauty of issuing debt denominated in something you can print is that you need never default until you also can't afford the paper and ink (Zimbabwe?).
Yes, Lenin did repudiate the imperial Russian debt.
Tony
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