Pensions advice

[wkdhd]

Hopefully a less heated conversation.

I am 65 next month and have had letters from various people regarding pensions. I've not had to deal with this before and find it quite impossible to make a calculated decision.
State pension. Sound easy but you can defer it if you wish and get extra.
Final value. I think that is what is is called. I thought I just got a fixed amount but apparently I can take some as cash.
Pension pot. I can take some as cash. The monthly payment bit can be a flat rate, increase with rpi and various other options.
If I knew when I was going to die, what inflation is going to be and what cash I will need to spend I could make a fist of working out what to do.
To make it worse for the annuity one I need do nothing and can then take advantage of changes to come in in April. I can also move the money to any other pension provider. I went through a calculation with Legal and General picking options more or less at random. That took 15 minutes.
I rang the money advice line and the pensions one, bot somewhat useless.
I am supposed to take advice from a pensions advisor, but they don't know the answers to the death, inflation questions either and don't know me either. Also I have no way of knowing how good they are.
You only get one go at this, and I have no idea what to do. Bit of a quandary. Anyone here have any advice? Although having multiple pensions sounds very grand, they are all for relatively small amounts of money. Luckily I am cheap to run

 

[JohnD]

the RPI rates are very poor. You have to live a long time before you see a profit. If you have several schemes, a better option is to take the max pension from one of them (flat rate) and leave the others to grow. If inflation erodes the value of your first, and you want a bit more, start drawing one of the others. Or go into Income Drawdown, so your pension fund can continue to grow (with luck) and don't take an annuity yet.

Better still, if you can afford to wait a few months, hang on until April when the pension liberalisation laws come into effect.

 

[wkdhd]

I hadn't even considered interest on the pension pot if I just leave it. As I said it is quite small, £40k which equates to £50 a week. You think I should just leave it for now.
I'll see if I can work out how much money I need to live on. Bit hard this year as I moved and have had all sorts of extra expenses

 

[JohnD]

If you have several policies, you can take 25% cash tax-free from one of them, and set it to Income Drawdown (which enables the remaining balance to continue growing). The minimum Income Drawdown you are allowed to take is 0%, leaving all the rest to grow, which may suit you if the 25% cash will last a while. You can change to a higher % later if you wish, and up and down as often as you want. The max % is a bit higher than you would get from an annuity, though of course the more you take, the sooner it will run down.

Beware of charges if you move from one company to another, especially if a salesman is involved.

I had several small schemes from various jobs, and moved them to Alliance Trust, which offers Income Drawdown. That means only one policy and one set of charges, rather than several. IIRC they do not charge to Transfer In from the other schemes, and their annual charge seems reasonable. No doubt there are other companies offering a similar service.

 

[Doug99]

I believe that if you take out an Annuity, the income is fixed for life and you will be unable to move it.

Asking for suggestions on a forum is ok for general discussion, however you should only make a final decision after you have discussed the matter (at length) with a qualified pension advisor.

 

[wkdhd]

Ah yes, but a qualified pension advisor is an unknown quantity. They don't know me or how long I am likely to live for and I don't know if they are any good at their job. There are numerous examples on this forum of people who apparently made a living as tilers yet can't stick a tile on a wall straight

 

[EFLImpudence]

Yes, why aren't all financial advisers rich and retired?

 

[Nige F]

I hadn't even considered interest on the pension pot if I just leave it. As I said it is quite small, £40k which equates to £50 a week. You think I should just leave it for now.
I'll see if I can work out how much money I need to live on. Bit hard this year as I moved and have had all sorts of extra expenses

Get the lot out next year ,put some away for your funeral , If you can live on the State Pension ,spend the rest.

 

[Diyisfun]

It also depends on, if you need cash for any projects.
It also makes a difference depending on your income tax situation. (That is why people may defer there state pension.
FA were allowed to give free info, I believe they are no longer allowed to be free.

 

[wkdhd]

I shall pick some local advisor more or less at random and see what they say.

 

[JohnD]

FA were allowed to give free info, I believe they are no longer allowed to be free.

No, they used to take a large and undeclared commission, often amounting to thousands of pounds for half a day's work, which the less-informed punter did not realise was coming out of his scheme, so did not realise he was paying it. Even worse, the salesman was incentivised to sell you a plan paying him the biggest commission, which might not be (usually wasn't) the one giving you the greatest benefit.

They are no longer allowed to do that.

If they want to work for free, nobody will stop them.

These days, they will generally charge you handsomely by the hour.

 

[wkdhd]

I went to see a local guy today. I assume he knows what he is talking about as he has made a living doing financial advice for 30 years. He charges a fixed amount per hour rather than the somewhat vague threats of commission from other companies.
He said to take the state pension plus serps plus a reduced part of the final value pension which is enough for me to live on. And to leave the pension pots where they are, he said with the new rules all sorts of new schemes will appear this year.
Well worth the hour @ £100/hr!
Going to measure the garage tomorrow to see if I can squeeze an Austin Chummy in as well as the Ruby.