Help needed with buying an annuity with my personal pension funds

[Keith5588]

Just now, BritManToo said:

Contact  Hargreaves-Lansdown https://www.hl.co.uk/

These are the only investment company that didn't try to cheat me, they have many options for you to to choose from.

Thank you @BritManToo  that's good information. I will either contact Hargreaves-Lansdown or Interactive Investor. 

[Lacessit]

13 hours ago, Patong2021 said:

 I don't see how they are cream for the insurers. The annuity value at death is paid to the estate. unless the owner arranded for the anuity to continue for a spouse's benefit.

My mistake, I thought annuities stopped on death, with nothing going to the estate.

[Keeps]

4 hours ago, Keith5588 said:

Thank you @Oliver Holzerfilled A good read.  I still have not fully decided except that I need to move the money from my old pension funds. 

Annuity rates are up at the moment but I could also move all the money to a SIPP and take a regular draw down.

I have made an appointment for tomorrow morning to have a 1 hour phone chat with a UK government person from Pension Wise.

A lot of misinformation contained within this thread from various parties.

 

I would agree with one of the comments to use Hargreaves Lansdown. You can transfer your entire pot to them and you do not immediately need to decide what to do with the money. It would involve transferring any holding within a SIPP. You can leave it sitting there as cash until you decide what to do.

 

I have done this myself and transferred various pension to them and also contributed directly to my SIPP.

 

You do not have to buy an annuity with your entire pot. That is an option. You could decide to buy an annuity with, say, £100k to cover guaranteed outgoings. You could choose to leave the remainder in cash (yes, they do pay interest on cash holdings) or invest in cautious funds or bluechip dividend paying companies.

 

There are numerous annuity options available (all within the Hargreaves platform). flat level for life, guaranteed for a number of years, built in increases per annum etc. There are obviously sliding scales of return depending on which option you take. You could probably achieve between 8% decreasing to 4% depending which option you decide to take.

 

Hargreaves also offer a 'health declaration' whilst seeking annuity quotes. The more health issues you have the higher the annuity income.

 

Don't forget though, with some of the options, you will lose the pot if you suffer an untimely demise. At least if the money (or partial pot) is invested, you can detail a nominee for your remaining money to be paid to. You provide the nominee details to Hargreaves Lansdown. They have no contractual obligation to do so but will respect people's wishes to the full extent they can. 

 

There is also the option to move partial amounts of the pot into drawdown whilst receiving 25% tax free lumps. Once in drawdown, you can then withdraw an income from the drawdown pot. I would advise against moving it all at once. Just move/take what you need. This also provides the benefit of allowing the SIPP pot to continue to grow, thus enhancing any future tax free amounts.

 

Be aware that there is an annual charge to hold within Hargreaves Lansdown of circa 0.45% per annum, collected monthly. There is no charge for holding cash and holdings of shares are capped per annum at a lower level.

 

If you require any further information, please send me a personal message. I beg you not to listen to much of the misinformation already posted.

 

Lastly, I had a pensionwise telephone discussion around 18 months ago. I didn't personally find it of much use but they will explain your options.

 

 

[jas007]

8 hours ago, jas007 said:

Unless I'm missing something, isn't that presuming a bit much? What happens if the bank becomes insolvent? No interest, no dividends, no nothing.  

 

At this juncture, is there really anything that's 100% guaranteed?  I don't think so.  

Just a quick note:  

 

Anyone here that's old enough to remember the 1987 stock market crash must surely remember the "portfolio insurance" everyone thought they had.  And what happened?  It didn't work.  Big time, it didn't work.  In fact/, the scheme exacerbated the sell off by creating a feedback loop.  As the market declined, the computers sold off stock in an attempt to maintain liquidity, exacerbating the problem.  The system failed, as did the market that day.  Fortunes were made be anyone willing to step in and catch some of the largest market capitalization stocks in the world as they were sold off, selling for what would today be literally pennies on the dollar. 

 

Well, that may what's in store for today's markets, thanks to the S&P 500 bandwagon everyone seems to be on these days. 

[Keeps]

10 minutes ago, jas007 said:

Just a quick note:  

 

Anyone here that's old enough to remember the 1987 stock market crash must surely remember the "portfolio insurance" everyone thought they had.  And what happened?  It didn't work.  Big time, it didn't work.  In fact/, the scheme exacerbated the sell off by creating a feedback loop.  As the market declined, the computers sold off stock in an attempt to maintain liquidity, exacerbating the problem.  The system failed, as did the market that day.  Fortunes were made be anyone willing to step in and catch some of the largest market capitalization stocks in the world as they were sold off, selling for what would today be literally pennies on the dollar. 

 

Well, that may what's in store for today's markets, thanks to the S&P 500 bandwagon everyone seems to be on these days. 

I don't disagree but I think the markets and investors learned a lot from that. There have been subsequent crashes but not as disastrous as that. Perhaps, lessons learned?

 

2007 was pretty grim but from a personal point of view, fantastic. Gave me a huge opportunity to make money. Makes sense to keep a healthy cash buffer for grim times and buying opportunities.

 

Let's not forget Covid. I lost a third of my pot on paper. Luckily, I was sitting on cash so bought in at the bottom. Got far more money now than I've ever had.

 

I do not and have never directly bought any of the 'big 7' US stocks. Some of the global funds I have hold them of course. Missed out? Maybe. But I'm happy with what I have. They don't generate income, only growth.

 

I know what I need to generate and the portfolio is structured accordingly. I generate more than I need currently solely from bluechip high dividend UK stocks as part of my overall pot. I will need more as the year's tick on but I will adjust the portfolio to suit my needs. 

[Liverpool Lou]

6 hours ago, Keith5588 said:

I have made an appointment for tomorrow morning to have a 1 hour phone chat with a UK government person from Pension Wise.

Bear in mind that Pension Wise doesn't recommend specific products or providers, nor does it provide investment advice, which seems to be what your original OP was requesting.

[Oliver Holzerfilled]

1 hour ago, jas007 said:

Well, that may what's in store for today's markets, thanks to the S&P 500 bandwagon everyone seems to be on these days. 

 

Everyone isn't 100% domestic US stocks.

 

"In 2024, the U.S. Treasury held 440 public auctions and issued approximately $28.5 trillion in marketable securities, including Treasury Bills, Notes, Bonds, TIPS, and FRNs."

[jas007]

33 minutes ago, Oliver Holzerfilled said:

 

Everyone isn't 100% domestic US stocks.

 

"In 2024, the U.S. Treasury held 440 public auctions and issued approximately $28.5 trillion in marketable securities, including Treasury Bills, Notes, Bonds, TIPS, and FRNs."

I'm not sure I'm following your logic.  

 

My point is this: many large institutional investors park a large percentage of their holdings in S&P500 index funds.  They do this because traditionally, such a diverse group of stocks have been seen as a hedge against  market uncertainty.  If some of the stocks in the index go belly up, so what?  The other stocks in the index will likely survive and life will go on.  The index is weighted by market cap, though, so a few large companies, such as Apple and Google and Facebook, can skew the average.  

 

However, that's only part of the problem.  Not only can a handful of stocks obscure overall market performance, modern portfolio theory requires that certain government statistics be taken as gospel.  The CPI, for example.  So what, you say? As we're finding out now, many government statistics are simply works of fiction.  Job numbers, first time unemployment claims, and so on.  

 

So the S&P 500 index funds are problematic. They're used as a means or providing "stability," and yet their very use can run contrary to the intended purpose.  The exit doors aren't big enough. 

 

As they say, "past performance is no guarantee of future results." 

[UKresonant]

I am another that is happy with HL.co.uk products.

 

(Annuity rates are good just now, but what rate of indexing on an annuity will keep up with inflation?  If an RPI indexed annuity was selected the indexing will move to CPIH in 2030ish)

 

I'm in the lucky position to have DB pensions that do what I think  your looking for from annuities.

 

My HL Stocks and shares ISA is mainly in Investment trusts, which often have dividend cover which smooths the income stream.  The ITs include some 'dividend heros'  

 

[will continue,  dinners ready]

 

 

[UKresonant]

1 hour ago, UKresonant said:

I am another that is happy with HL.co.uk products.

 

(Annuity rates are good just now, but what rate of indexing on an annuity will keep up with inflation?  If an RPI indexed annuity was selected the indexing will move to CPIH in 2030ish)

 

I'm in the lucky position to have DB pensions that do what I think  your looking for from annuities.

 

My HL Stocks and shares ISA is mainly in Investment trusts, which often have dividend cover which smooths the income stream.  The ITs include some 'dividend heros'  

 

[will continue,  dinners ready]

 

 

[Big chunk missing it timed out!]

 

Annuities Vs ISA /SIPP dd, availability of value to meet for example a large medical fee.

 

Idea;- <=40% Annuity, 25% SIPP, 25%ISA, 10% Cash (some gold?)

 

If a chunk of money along, I would actually maybe add a purchased annuity (rather than from my pension funds)

 

A basket for each egg, depends what the management charge on the basket is, of course......

 

Hope you get things sorted whilst UK tax resident and before you sell the UK address....if possible.

[Oliver Holzerfilled]

12 hours ago, Keith5588 said:

Thank you @Oliver Holzerfilled A good read.  I still have not fully decided except that I need to move the money from my old pension funds. 

Annuity rates are up at the moment but I could also move all the money to a SIPP and take a regular draw down.

I have made an appointment for tomorrow morning to have a 1 hour phone chat with a UK government person from Pension Wise.

 

One thing to add, 72 might be a little on the early side to buy an annuity if it is not indexed to inflation (assuming you don't have any health issues).  If you have inflation indexed bonds available to you one option would be to put 5 years of baseline expenses in those then reassess annuities around age 77.  

[Keith5588]

Thank you @UKresonant I like the basket for each egg analysis.

And thank you  @Oliver Holzerfilled

[treetops]

I haven't used it myself, but I believe HL have a good online calculator where you can play about with variables like whether you want the income increasing in line with inflation or fixed, whether you want a spouse income on your death or not, and other such options.

 

Worth playing around with probably to see if the results are in line with your expectations.