Annuity

[Tilly2]

I have had an annuity for the past three years. I receive a monthly income from this annuity. Will I now be able to withdraw the money as a cash lump sum?

[fiction-factory]

No, not under the new arrangements- the changes are for those who haven't yet taken an annuity. On Money Box last week though (see website) they said the idea of allowing existing annuitants (if that's the word) to be able to cash all/some in was being looked at as a future change.

[furrypusscat]

I believe existing annuities will be allowed to be cashed in next year, April 2016.

[Tilly2]

Thank you both.

[fiction-factory]

This is worth listening to
http://www.bbc.co.uk/programmes/b0557675

[ubasses]

From what i have read, the answer is no. However what you can do is sell the income from them. So there is going to have to be a market for them, and somehow they will have to be valued which will include an assessment of your lifespan.

[Tilly2]

That sounds rather complicated, ubasses. I'll stick with the monthly income. I fon't actually need the lump sum at present.

[Hymie]

Although the government has indicated that they want people to be able to exchange their annuity for a cash lump sum – when it finally materialises, I suspect joe public will be shafted twice over as a result.

Let’s say at age 65 you took a flat rate annuity from a £100k pension pot, you might be lucky to get £5.5k/annum. At that rate you will need to live until 83 just to get your money back – not forgetting all the interest you’ll have lost over those 18 years.

Now you want to sell your £5.5k/annum pension for a lump sum – I doubt very much that you will be to get much more than £60k (for someone aged 65) in doing so; thereby having lost around £40k from your original pension pot.