Lifetime Allowance (LTA)

[ContractorBanking]

I don't understand why anyone would voluntarily purchase an annuity.

Better to buy £1m of property as you'd probably end up with a gross yield of around £35-60k plus any capital appreciation.
And best of all, unlike an annuity, which goes to zero on death/spouse's death, the property can still be handed down.

[Sterling]

Totally agree with you .... what I was drawing attention to was the fact that you would struggle to find a decent place to put £1M and get 2.5% in a savings account.

The current rates are between 0.5 - 2.0%.

There seem to be a few places offering "5%" but the ones I've looked into are all capped at some low, low value, like 3k.

I would never buy an annuity.

Of course, I wouldn't buy an annuity. I was using it for evaluation purposes to point out that £1m in a pension is not a huge sum of money. The capital in the pension is protected from inheritance tax and should I die before the age of 75 (which in my case is most probable), my family get the capital or an income tax free. I would be using the tax free lump sum first and then drawdown when the cash is depleted.

[Paralytic]

I don't understand why anyone would voluntarily purchase an annuity.

Better to buy £1m of property as you'd probably end up with a gross yield of around £35-60k plus any capital appreciation.
And best of all, unlike an annuity, which goes to zero on death/spouse's death, the property can still be handed down.

(my bolding)

Or depreciation.

I agree with questioning the benefits of an annuity, however.

[Lance]

Totally agree with you .... what I was drawing attention to was the fact that you would struggle to find a decent place to put £1M and get 2.5% in a savings account.

The current rates are between 0.5 - 2.0%.

There seem to be a few places offering "5%" but the ones I've looked into are all capped at some low, low value, like 3k.

I would never buy an annuity.

perhaps it might be harder to find. I'd not suggest savings accounts anyway, but it was to illustrate the madness of buying an annuity, and that was a very, very poor annuity rate as well.


To be clear though. Interest rates are low now, but a pension is for life not just this decade.
The long term average is considerably higher, and is likely to rise again soon (fingers crossed).


Although with £1M a diverse portofolio of investments is the best suggestion.