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Annuity Rates


Annuity Rates










Annuity Rates








Pension Drawdown
pension values can be higher from valuation options Ask for a free drawdown quote
Take control of your pension without the need to buy a lifetime annuity, there is no obligation and quotes are free
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Easy access - Take income or lump sums when needed
Extra initial income Flexible income - No limits to access your money
Don't need an annuity Tax free cash - You can take a tax free lump sum now
Protect your capital Smaller funds - Ideal for funds of £30,000 upwards
Specialist advice keep your options open - Move to another provider
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Pension drawdown   Income drawdown   GAD drawdown tables

Pension drawdown rates


The following capped drawdown tables assumes a pension fund of £100,000 net of the £33,333 taken as a tax free lump sum from an original fund of £133,333. The highest annuity rates are on a standard single life, level with no guarantee basis and the income drawdown plan is based on a 150% withdrawal producing an increase/decrease in annual income over annuities.

The table shows the increase or decrease in annual income from an income drawdown plan when compared to the highest standard pension annuity.

Fund size: £100,000 (after taking £33,333 tax free cash)

FTSE 15-year gilt yield: 2.75% (15 August 2014)


Last updated: 25 August 2014


Unisex Annuity vs Capped Drawdown
Age Single
Life Annuity
Drawdown More/Less
55
£4,784  
£6,900  
£2,116  
60
£5,326  
£7,650  
£2,324  
65
£5,989  
£8,700  
£2,711  
70
£6,833  
£10,050  
£3,217  
75
£8,044  
£12,300  
£4,256  
The annual rates shown above are based on a purchase price of £100,000 and should be used as a guide only. Pension drawdown assumes a maximum 150% withdrawal. Pension drawdown is a higher risk pension than annuities and not suitable for everyone. For a pension drawdown rate specific to your circumstances you should complete the drawdown quote.


As the spouse will receive the drawdown fund on death, the basis for the comparative annuity shows the spouse receiving the same benefits as the annuitant. For the above example the annuity is a single life, level, no guaranteed period, monthly advance annuity where both the male annuitant and female dependant are the same age.

As you can see from the table the figure of pension drawdown at ages 55 is £7,200, whereas at age 75, this has risen to £12,450. You may find the details shown within this table very helpful but they are based on a purchase price of £100,000 and therefore should only be used as a guide. It is likely that your own situation will be different therefore please do not assume these figures will apply to you too. As with any retirement plan there are advantages and disadvantages, and for this reason we have detailed a comprehensive list of advantages and disadvantages below which we hope will be of assistance.


What are the advantages

Yes Ideal for smaller funds from £30,000 and more.
   
Yes Take your tax free lump sum now.
   
Yes Easy access to income or single lump sums at any time.
   
Yes You can take up to 150% GAD (about 50% more than an annuity) if other income is less than £12,000 pa.
   
Yes Leave the fund in a secure cash fund or select a protected growth fund with a 5.95% return.
   
Yes Low cost structures with no extra charges for withdrawals.
   
Yes Contribute to the plan and receive tax relief at your marginal rate or £3,600 pa if you have no taxable earnings.
   
Yes The fund, in the event of early death, can be transferred to your spouse or beneficiaries.
   
Yes Take your fund as a cash sum less tax at your marginal rate at the end of the term from April 2015.
   
Yes You can consider your options at any time, including a lifetime annuity, fixed term plan or any other option available.
   
Yes You can move your fund to any other provider drawdown at any time without penalty if you are offered better terms.
   
Yes See if product innovation can offer you attractive options such as combining a guaranteed income and access to capital.
   
Yes Avoid buying a lifetime annuity now when rates are near an all time low.
   
Yes You do not have to give your capital away to an insurance company in exchange for an income.


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Types of drawdown

People retiring now can select the following:

Flexible drawdown
Capped drawdown

For flexible drawdown there is no limit to the level of income that can be taken from the plan as long as you can show you have £12,000 pa guaranteed income such as from the State pension and other pension income.

Capped drawdown is subject to a limit of 150% GAD where someone cannot show they have a guaranteed income of £12,000 pa or more. You can also continue to contribute to a pension in the same tax year, especially useful if you are still working and can benefit from tax relief.

The income taken from the plan depends on the need for income in the future or intention to take a cash sum from April 2015 but the usual options for capped drawdown are as follows:

Maximum 150% GAD
120% GAD
£Nil income
Optimal Income - a similar income to a single life annuity

Iincome from drawdown can be taken monthly, quarterly, half yearly, annually or as single withdrawal when required.

Funds in drawdown can be invested in different ways such as cash, protected growth or fully invested and this depends on your attitude to risk and the time period you intend to leave the funds in drawdown. Cash is low risk and currently produces low interest of about 1% per year, protected growth is defensive offering 5.95% per year which is added daily and fully invested is volatile falling and increasing daily but with higher potential returns of 6-7% per year. The choices and possible gains each year are as follows:

Low risk cash fund - growth of 1%
Protected growth fund - growth of 5.95%
Fully invested fund - growth of 6-7%


Drawdown suitability


The following are a number of reasons why an individual would consider income drawdown rather than to purchase a pension annuity:

Income drawdown could be attractive if an individual wishes to access the tax free lump sum but does not require a pension income, possibly because they continue to receive an income from employment.
   
If an individual is willing to accept a higher risk from pension drawdown over a longer period of time to benefit from continued investment growth, possibly because they have other significant assets and investments.
   
If an individual has alternative secure income such as a final salary pension and can afford to experience fluctuations in the income level from pension drawdown.
   
If an individual's existing pension scheme requires a spouses pension as part of the retirement benefit but the member is single, pension drawdown could be one option to consider.
   
If an individual is in poor health, income drawdown can be considered in addition to impaired health annuities to provide a pension income.


Risks of invested drawdown

For those that take a long term view and access investments through drawdown, there are some risks when compared to the lifetime annuity as follows:

There is no guarantee that the individuals income will be as high as that offered under the pension annuity (or compulsory purchase annuity).
   
Due to the effect of mortality drag the value of the pension fund may not achieve the required level of growth to maintain income levels at the same level to those achieved through the purchase of a pension annuity purchased at outset.
   
High withdrawals may erode the value of the pension fund, if investment returns are not sufficient to make up the balance this may reduce the amount of any potential pension annuity.
   
There is no guarantee that annuity rates will improve in the future. They could be lower when the individual decides to purchase their pension annuity than the current rates. The eventual pension may be lower than if the individual had bought a pension annuity at outset.
   
The value of the pension fund may go down as well as up and poor investment performance could result in the individual not having a sufficient fund available to purchase annuities equivalent to the amount they would have received at outset.
   
Death benefits payable as a lump sum that are not paid to the individual's spouse may be liable to Inheritance Tax in addition to the the 55% tax charge.
   
Charges within an invested drawdown plan are higher than conventional pension annuities due to the requirement for regular reviews and investment advice to ensure the pension fund does not run out of money.


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About Sharing Pensions

Sharingpensions.co.uk was created by it's founder Colin Thorburn in 2001 to provide a free pensions and annuity resource to hundreds of thousands of people at retirement making their decision making easier and to select the best options.

Colin Thorburn has nineteen years experience in pensions and annuities, is an individual authorised by the Financial Conduct Authority and business is submitted through Blackstone Moregate Ltd which is authorised and regulated by the FCA (no. 459051).

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Simply speak to our pension expert Colin Thorburn if you need to discuss your options or would like us to take your details for the pension drawdown
quote, please contact us on:
020 8816 7501
Monday - Friday 9am-6pm

Calls from overseas:

+44 20 8816 7501
Important details
you need to know
Ask for an impaired quote

Suitable if your fund is £30,000 or more before tax free cash.

To access flexible drawdown you will need to show a guaranteed income of £12,000 pa, otherwise capped drawdown can be used.

You can select a safe deposit fund or higher risk protected equity fund depending on your attitude to risk and time frame.

The drawdown access quote offers easy access with flexible income and you can review your options at any time.
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