Pensions - am I missing the point?
Discussion
Evening all,
First excuse my ignorance in this as my financial knowledge is limited.
I spoke to a well known pension provider about where to stick my money so I can have a nice nest egg in 23yrs time. I have some property so he suggested normal mix of ISA and pension, fair enough I thought, as a modest amount each year will get a projected pot of approx £350k in each (unless things go tits).
However I got the pension summary through for me to check before I sign, and my £350k pot gets me £5k a year or £90k lump and £4k a year. What happens to the rest of the money??? £5k a year is pretty meaningless. Ok you save 20% on contributions, but it doesn't seem I'm getting a lot for my investment.
Comments welcome
First excuse my ignorance in this as my financial knowledge is limited.
I spoke to a well known pension provider about where to stick my money so I can have a nice nest egg in 23yrs time. I have some property so he suggested normal mix of ISA and pension, fair enough I thought, as a modest amount each year will get a projected pot of approx £350k in each (unless things go tits).
However I got the pension summary through for me to check before I sign, and my £350k pot gets me £5k a year or £90k lump and £4k a year. What happens to the rest of the money??? £5k a year is pretty meaningless. Ok you save 20% on contributions, but it doesn't seem I'm getting a lot for my investment.
Comments welcome
The Leaper said:
OP,
I don't know where you got £350,000 buys you £3,500 pa from. Anyway, a Google look at websites quoting annuities indicates that £350,000 will get you near to £20,000 pa on current rates at age 65. Still not great but better than £3,500 pa.
r.
£500/month (increasing with inflation), 23 year term, with a mid rate scheme gets £377,000 according to St James's Place. Which in turn gets me £94,400 plus £4k a year. Or £5k without the lump.I don't know where you got £350,000 buys you £3,500 pa from. Anyway, a Google look at websites quoting annuities indicates that £350,000 will get you near to £20,000 pa on current rates at age 65. Still not great but better than £3,500 pa.
r.
PinkFatBunny said:
£500/month (increasing with inflation), 23 year term, with a mid rate scheme gets £377,000 according to St James's Place. .....Or £5k without the lump.
So you put in £500pm for 23yrs then get £400pm back (in todays terms). Assuming you retire at 65, you'll be 88 before you break even. ringram said:
f
k annuities, look into drawdown. You can take 120% of roughly what an annuity is, though they call it something else.
Or if you can stump up £20k PA elsewhere you can go into 100% flexi drawdown where you spend as you like.
Annuities are for fools IMO
I'll read up on those (no idea what they are).k annuities, look into drawdown. You can take 120% of roughly what an annuity is, though they call it something else.Or if you can stump up £20k PA elsewhere you can go into 100% flexi drawdown where you spend as you like.
Annuities are for fools IMO
Thanks for the pointer.
horses for courses innit. Quite a few folk will live a good many years past 65 these days, if you don't buy an annuity by the time your 80 and your eyesight and marbles are waving you goodbye someone is going to have to administer and look after your capital as leaving it in an instant access savings account is going to give you a st and fluctuating return. Some people like the certainty.
Whilst we're on the subject is it not true that you have to buy an annuity once your pot gets over a certain size? What is all this drawdown stuff about. I have a couple of very modest pension pots, neither will reach much over £100k I don't think but I assumed I'd have to use them to buy an annuity.
t and fluctuating return. Some people like the certainty.Whilst we're on the subject is it not true that you have to buy an annuity once your pot gets over a certain size? What is all this drawdown stuff about. I have a couple of very modest pension pots, neither will reach much over £100k I don't think but I assumed I'd have to use them to buy an annuity.
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