Looking For Ideas.....

[ToraToraTora]

For our pension pot up to now we have no alternative to buying an annuity (ok some draw down/limp some) is allowed. Now I hate the whole annuity idea but I must grudgingly accept it's merits. As far as anything can be guaranteed it is a safe option all be it with current interest rates (...and thus gilt rates) it provides a derisory income rate, needing a huge pot to get anything like a sensible income. Anyway I digress, with the new rules comming in I suppose myself and others are looking for creative ways to maximise income in retirement. I imagine financial firms will produce various "products" for the market but does anyone have any ideas for creating an income beyond the annuity or is it really still the best bet?

[ToraToraTora]

doh, limp some = lump sum

[ludwig]

There's something to be said for taking the whole lot, spending lavishly for as long as you can, and then topping yourself. Probably not the kind of answer you were looking for, but it's definitely an option.

[ToraToraTora]

On the contrary ludwig, that's an Idea I have considered, with one tiny adjustment! liquidate all dosh from everywhere, go on a massive bender till it's gone then the state will pay for everything like it does for those that have made no provision whatsoever! However I'm too sensible for that!

[Old_Geezer]

No expert but I think it was generally agreed the interest / changes on annuities were an abuse of the pensioner's savings.

I suspect your best idea is to pay an independent financial expert to give you their advice. If you can identify them here then great. Have you scanned the various websites to see what is on offer now ?

[Old_Geezer]

charges
as typed

[ToraToraTora]

not really OG I was really interested in the more unusual approaches that others may think of.

[wolf63]

Property?

Gambling - poker or bookies?

Write a book?

Breed a rare animal - i.e. a cat that won't bite or scratch its human slave.

[Retrochic]

Buy a property to rent out, it does not have to be the area you live in as there are Agents who deal which everything. An £100k investment could yield £7000+ a year gross as well as gaining in Equity as prices are sure to go up.

[ToraToraTora]

yes retro, that's an option I'd thought about, the only worry is to get enough of the pot to buy a house would incur tax at 40% or 50% which would eat into any advantage. I may well do that with the initial tax free lump sum you are allowed, (even under the current rules).

[-Talbot-]

If buying a house leave enough on the mortgage so it doesn't count as income.
(I'm assuming you won't need the rent?)

[Retrochic]

Tora -look into property prices in the less well off areas. We purchased a two bed end terrace for £40k in auction in the N.E England and yes it needed sprucing up a bit but for under £5k we fitted new kitchen and bathroom,full redecorating and got a tenant almost immediately at £450 a month.

[buildersmate]

If your pension pot(s) are anything like half decent, they should be increasing a an annual rate of 5% per annum. A couple of mine are running at over 6. So I see no point in pulling huge lump sums out before you need the money, especially as it throws one into higher rate tax - something I for one have sought to avoid in my working life by investing in pensions. Point taken, though about the tax free sum, which I like the idea too of investing in UK property. It gives an annual income plus the reasonable expectation of capital growth in the longer term.
Not sure what point Talbot is making - property rental income is income for tax purposes, less any explainable expenses like mortgage interest. But it makes no sense to have a buy to let mortgage if one has the capital to fund outright.

[Old_Geezer]

I would assume talbot is preferring to deal with CGT later than income tax today ? Recall tenants can be good or bad.

[buildersmate]

PS. One strategy you could consider is to drawdown from your pot each year roughly the same amount as an annuity would have paid you. The lump sum left keeps appreciating, less the drawdown, and is never lost bit left in the estate when the "final curtain" draws.

[buildersmate]

Doesn't change the price of fish, OG. Rental income is taxable income for the owner. CGT occurs as well, if required on sale.

[ToraToraTora]

Yes BM I think that will be the initial holding position anyway while I look around. Retro, yes I like the idea of getting modest property in low value areas, I just don't want any hassle so I'd need to find a good agent to do full management and not rip me off.

[-Talbot-]

Doesn't change the price of fish, OG. Rental income is taxable income for the owner.

What income?

[Retrochic]

Tora when you are ready let me know through AB and I will pass you over details of an Agent we deal with, they specialise in finding low value homes for cash buyers and some already have long term tenants in them. Highly recommended.

[solvitquick]

The annuity scheme is not attractive but at least pays a small income.
Despite that, it can pay-off if you have a long life-span as happened with my late mother.
As eldest son, I was forced to agree to an annuity scheme for my mother by virtue of my father's pension plan when he died prematurely. At least I was allowed to draw-down sufficient to pay her mortgage and guarantee her a home for life - first aim obviously.
That apart, the last person to advise is your bank-manager. He/she is only a sales-person.
As the stock-exchange is a gamble (with your money) any loose money is best gambled elsewhere e.g. Premium Bonds. At least that invested money is safe although devaluing with inflation. It can always be cashed-in if a major emegency occurs.
TTT, beware of any magic-money plans. If it sounds too good to be true, it isn't.
SIQ.

[solvitquick]

As regards rental of a second property, it sounds great until you face the underlying facts. It means you have to pay for the upkeep of two homes. That means doubling your insurance on both as well as paying community and income tax as well as management fees.
We have considered this and found it impractible in relation to our savings and current company-pensions income.
Let's know if you find unique scheme, otherwise play safe.
SIQ.