Drawdown with impaired life expectancy.

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- Derek G.
  
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posted
13 years ago

Wed, Mar 2, 2011 2:09 AM

I've been collecting a sipp drawdown pension for the last 4 years and

3 months and soon will have to review my drawings, (probably downwards) since the fund has since been depleted. Is this correct?

Unfortunately I've had a serious spell of ill health, and have an impaired life expectancy. But it appears that there is no such thing as an impaired life drawdown I would have to buy an I.L. Annuity of which there is a limited choice. Is this right?

This would frustrate the control I thought I had over the way my pension was funded (out of my own money) and my original intention to leave the residue of my pension fund to my children on my death.

Time and time again it seems the government have announced their intention to remove the requirement to purchase an annuity but when the chips are down it doesn't happen.

What is the motivation for the governments apparent devout intention to make sure the terminally ill (of all people) are restricted to taking the annuity route.

Anybody know ? Derek G

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- David Woolley
  
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posted
13 years ago

Wed, Mar 2, 2011 7:37 AM

The government don't want the tax payer to take the insurance risk.

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- tim....
  
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posted
13 years ago

Wed, Mar 2, 2011 10:03 AM

Not necessarily, your normal expected life is now shorter so the amount available will go up because of that.

If your fund has been invested "properly" and has grown in the expected manner, the drawdown amount available to you should be about the same.

What will have the biggest effect (up or down) on the amount that you can take will be the individual performance of your fund over the last 4 years.

As I see it, the problem with impaired life assessments is that they are sometimes wrong.

The reason why you can get an impaired life annuity is because the risk of getting it wrong lies with the insurance company. With an impaired life drawdown the risk of getting it wrong lies with you, and ultimately when you run out of money, the government.

I think that they are making the changes promised, but (for the reason above) I don't think you can expect them to ever make the change that you want

As above, though this is purely my assessment of the situation, I have no idea of the politicians assessments.

tim

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- shareholder
  
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posted
13 years ago

Wed, Mar 2, 2011 11:21 PM

Act FAST, like really fast ! The government and pension companies have conspired to reduce the amount the can pull from drwadown from 120% of equivalent annuity to

100% equivalent annuity, starting April. So get a new valuation, and get taking - as aggressively as possible.

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- tim....
  
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posted
13 years ago

Thu, Mar 3, 2011 12:19 PM

I doubt that there is anything that he can do wrt this.

The start of his drawdown period is fixed from when he started to take the money. So from the information that he has given he still have 9 months to run on the first drawdown period and is three months into a "year". Whilst it does appear that you can contrive to terminate the 5 year period early that only takes effect from the start of the next "year". So he is too late to change this.

(BTW I doubt that the pension industry conspired in this, they have no interest in forcing someone keeping their money in the fund if that person can stay in drawdown until they die, which is another proposed change)

tim