Its an annuity. Guaranteed payment for the rest of your life. It is not interst on your money. There is also an element of your capital back. Of course you don't get access to the lump sum, you have used to buy the annuity. If you think its just interest then keep it and put in a savings account.
Alas the script is required. I think when getting an equity release i had to have 3 conversation each lasted nearly an hour.
In the UK, you can opt to have your annuity guarded against inflation and/or allow the un-spent sum passed to your family when you croak. To choose both is the option that gives you the smallest annuity, about 50% of the one that is not inflation-proof and your family get nothing. Even the most generous annuity (in my case) gave a pitiful return of less than 3% on my initial lump sum. Over the long term, the stock market yields about double that, and you still have your initial investment.
). Only use those people to help you form the questions that need to be asked to professionals!
THIS!you should GET ADVICE from someone who knows these things, not anonymous people on the internet or a mate down the pub (if we still went to pubs
The amount is not guaranteed, it could be less than the current interest rates and often is. You give the pension company the shirt off your back and they give you back the buttons, if you're lucky.
Not strictly correct. The rate is set by the investments made at the point of purchase. Those investment are required to be low risk government bonds, company bonds (very good credit risk) etc. Nowadays infrastructure purchases by the insurance company (low risk) and in the case of legal and general the returns on social housing (which are also considered low risk). The last 2 are not affected by interest rates. Bonds by contrast are. The bonds which previously existed will fetch a higher price when bought if interest rates have gone down and vice versa. Hence the return will fall/rise and there would be fall/rise in the price at redemption.
The amount you receive is guaranteed for life. The amount you receive will always be greater than savings rates.
Annuities are an insurance policy. Like house insurance, car insurance etc some gain some loose. Average is the average person. Some will gain some will loose. It ain't that hard.
Drawdown would be my option as it would limit my tax charges (if any) BUT I would consider putting some in a annuity as at least some guarantee of income. In particular your statement about managing investment at 85. As I manage all my own investments in a sipp I may consider it. My memory is crap as it is. Thank you for your advise!!Although the majority of posters are correct and annuities are not good value at all in this low interest rate/quantative easing world we live in, for some people they are still a valid choice because of the guarentee that they provide. Do you still want to be managing a portfolio when you are 85 ?
But yes, currently, better to leave the money in drawdown in my opinion, but better than my opinion you should GET ADVICE from someone who knows these things, not anonymous people on the internet or a mate down the pub (if we still went to pubs
Markets go up markets go down including nicely diversified portfolios. Unlike annuities. Annuity investments made by insurance companies are required to be low risk hence low returns. Blame the PRA for that not the insurance companies.
