Annuity tax avoidance

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KellysEye

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I've been looking into buying an Annuity to start at the end of August. If your income from state and private pension is greater than the tax threshold of £8105 then the best option is to take a cash lump sum from the value of your pension with a lower annual payment. The lump sum amount I will take out is equivalent to eight years of pension income, thus eight years tax free.

Also make sure you have a 10 year guarantee of the pension income, if you haven't got that it costs £400 to £500 and tell the pension company you want it when you take the Annuity. Another option is to receive a lower annual income and your wife/partner will receive 50% of your pension when you die. You also need to tell that to the Annuity company. Both of which I have done.
 
2013-14 allowance is now £9440. Always take max 25% lump sum. I think pension drawdown is better than an annuity at current rates. Allowable max drawdown is increasing by 20% from April 2013. Balance of fund is still yours and can be passed to spouse on your death, either as lump sum with tax payable to buy a boat to keep it PBOish or as fund for her to keep or continue with drawdown.
 
>I think pension drawdown is better than an annuity at current rates.

It depends how much you have in your pension fund and how long you live, also there is a government limit on how much you can draw down per annum. There are many instances where because of the increase in the value of the fund the pension company ends up with over half your fund after your death. In other words if you want to ensure that you and your partenr get the all the money don't do it. I looked at it and decded not to go that way for the reasons above.
 
Did you guys know that offering financial advice without being registered with the FSA as a Financial Adviser is against the law? I suggest you contact one if you need advice on pensions, it's a real mine field. There are plenty of good ones around, I can give you a list if you like based on 42 years in the business. Oh just in case you think I'm touting for business, I'm retired, thank goodness.
 
KellysEye said:
>I think pension drawdown is better than an annuity at current rates.

It depends how much you have in your pension fund and how long you live, also there is a government limit on how much you can draw down per annum. There are many instances where because of the increase in the value of the fund the pension company ends up with over half your fund after your death. In other words if you want to ensure that you and your partenr get the all the money don't do it. I looked at it and decded not to go that way for the reasons above.
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Have you not got that the wrong way round? Annuity - all money now owned by pension company. If you die money gone! or wife and you die in the case of a joint annuity. Draw down - you transfer your whole pension pot into a SIPP (like Hargreaves lansdown) Pick what funds you are going to invest it in - HL publish a wealth 150 but for pension in UK its fairly safe to pick UK based investments. Sell amount you want each year (pick same amount as annuity or more now while you are younger - limit is an IR clac based on current annuity rates). Money left in SIPP will grow (or could reduce) with markets BUT money is all yours and if you die it goes to wife after tax (it was untaxed money invested in the first place). Now if you do this you pay small fee to HL and fund manager. If you do an annuity - you get certainty BUT Annuity Co Fat Cat and your Financial Adviser gets a big bonus (out of your money!) after all they are not there to give money away.

I moved one my pension pots in Aug 11 to HL after taking 25% tax free lump sum to pay off some of the mortgage. I have not taken any drawdown as I am still working but SIPP fun has grown since Aug 11 by 22.6%. Some of the european funds have gained 42% but some of the safer investments (Bonds) have only gained 7%.

There has been many threads on Pensions/SIPPS etc in the lounge with some good points raised. WRT the post above I have a distrust of Financial Advisors as they sold endowment mortgages which IMHO were a bad investment which I think many would now agree. You decide whether FA's advice was based on judgement or the size of their commision from the endowment company!
 
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richardbayle said:
Did you guys know that offering financial advice without being registered with the FSA as a Financial Adviser is against the law? I suggest you contact one if you need advice on pensions, it's a real mine field. There are plenty of good ones around, I can give you a list if you like based on 42 years in the business. Oh just in case you think I'm touting for business, I'm retired, thank goodness.
Click to expand...

Tosh.
 
I have never seen such ill informed twaddle, as has appeared in this thread.

Sometimes an annuity is the best option at retirement, sometimes it's not, and drawdown is better. Only an IFA, who will have spent years becoming qualified, will be able to advise what is best. Why does anyone think such advice should not be properly paid for?

And to the Hargreaves Lansdown fan, do you think they work for nothing?

It's only when I see a thread about something I know about, that I realise how dangerous it is to rely on anything anyone says on here.
 
Achillesheel said:
I have never seen such ill informed twaddle, as has appeared in this thread.

Sometimes an annuity is the best option at retirement, sometimes it's not, and drawdown is better. Only an IFA, who will have spent years becoming qualified, will be able to advise what is best. Why does anyone think such advice should not be properly paid for?

And to the Hargreaves Lansdown fan, do you think they work for nothing?

It's only when I see a thread about something I know about, that I realise how dangerous it is to rely on anything anyone says on here.
Click to expand...

:):)
 
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