Drawdown V Annnuity

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Wed Feb 11, 2015 1:54 pm

Drawdown V Annnuity

by Zak » Mon Feb 16, 2015 7:58 pm

As you will have read as from April 2015
if you are over 55
you can take ALL your pension fund
and do whatever you want with it :D
after the tax man has had his cut of course. :x

Traditionally people bought themselves an annuity
which gave them a guaranteed pension for the rest of their lives.

When they died,
the pension company kept whatever was left in the pension pot.
The reality of this is
that they kept the whole pot because :evil:
what they had been payed out as annuity
was less
than the interest that they were making from your pension pot.

One alternative is drawdown
which means that you leave the pension pot fund where it is
and draw your pension from that fund.

The trouble is that with people living longer
there is a very strong chance (50/50) that
hey will run out of money before they die. :o

One solution is to ensure that you pension pot
continues to grow even when you are drawing down.

Imagine that your pension pot grows by £10,000 per annum
That means that you can take out £10,000 every year
and your pension pot will not diminish. :D

So you have a pension while you are alive
and when you die
your pension pot will still be there for your beneficiaries.

The message is
Take advice
Do your sums very carefully
and plan ahead.

I'd prefer to take the money at 55
and use it to invest in property.

That way I escape the pension companies completely
and I have total control over my money.
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Mon Mar 02, 2015 1:23 pm

Re: Drawdown V Annnuity

by clivemarian » Mon Mar 02, 2015 1:48 pm

Hi Zak,

You make many good points. As you say, one potentially better use of your pension monies is to take the funds out after age 55 and invest them in property which certainly offers, in most cases, asset backed stability. The only slight drawback being low yields (maybe 5%-7% per annum) , unreliable capital growth and hassle dealing with tenants. In addition, whilst capital growth might add say, 10% per annum to your overall wealth the problem is you cannot access this annual growth until you eventually sell the property....and then once you do, you have no more reliable income coming in from the property anymore. What about if you could get a FIXED 20% PER ANNUM (or more) return from an investment WITHOUT any of the hassle of property ownership. I am a Wealth Advisor and spend my life studying UK and overseas investments to help my clients to improve their finances. There are a number of contractually sound and asset backed investments that do exactly that. With regards to pensions themselves there is also a huge part of the market that most of the general public dont know much about, called SIPPs (Self Invested Personal Pensions). The have access to SIPP compliant investment funds delivering as high as 36% per annum FIXED returns, compared to the dismal and volatile returns on offer from most of the mainstream pension companies. At that level you would double the value of your pension every three years. It is fully IFA reviewed for FCA compliance. With so many people about to make the biggest decision of their lives it makes sense to get a full IFA review of their finances so they can receive the best advice. If you or anyone else reading this post would like to know more and undertake an IFA review to help them with their pensions and finance please contact me at clive.marian@btinternet.com

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