Discussion in 'Finance, Property, Law' started by old_bloke, Jan 31, 2013.

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  1. Just a hypothetical question, say if you we're working out of the UK at 55 you decided to open an annuity in the UK .

    You kept on working but received the monthly payments from your UK annuity .

    Would this be legal? Ish?
  2. Sixty

    Sixty LE Moderator Book Reviewer
    1. ARRSE Cyclists and Triathletes

    Don't see why not. Plenty of annuitants continue to work. Is it the being out of the UK bit you're querying?
  3. No the legality.
  4. It's just a form of investment with a regular income. Taxable income (in the UK at least).
  5. Sixty

    Sixty LE Moderator Book Reviewer
    1. ARRSE Cyclists and Triathletes

    Then you're fine. My mother, for one, took her annuity and worked for a further five years (for a firm of accountants!) with no issues and I know from a job I had years ago with a life co that she's far from alone.
  6. If you have accumulated a personal pension, you can convert the pension pot into an annuity at 55. You don't have to until you are 75, IIRC. You can shop around to find the best annuity for your situation. If you smoke or are an alcoholic, you can ask for an impaired annuity which will offer a higher rate.

    The rate at which the annuity pays out is fixed once you start drawing it - either in real terms or in inflationary terms (but that will cost you a lot more). Unless you ask for it to cover your spouse (more expensive and usually 50% of the payment for her life upon your death) then your annuity is good for your life only. It stops when you croak - even if that is next year.

    It is taxable at your highest rate of income tax.

    As others have already pointed out, AFAIK, you can draw an annuity any time providing you meet all the rules. But why would you do so now?

    In line with interest rates, annuity rates have fallen to their lowest level for years, if not ever, driven down by the Coalition's frantic attempts to keep the economy going. The FT publishes a retirement income snapshot in the Saturday copy. Last weekend, it showed the best gross level annuity for a £100,000 pension pot and a single life:

    Male aged 55 - £4500 pa
    Male aged 60 - £4990 pa
    Male aged 65 - £5750 pa

    Remember that the annuity is fixed at the start, so if you decide to buy a level annuity at 55, you will receive £4500 pa until you croak - even if you live until 105! What price a pint of beer in 50 years time?

    If you are trotting off to work abroad, you will probably be earning squillions and if you draw an annuity, you will have a UK income which will be taxed at a suitably high rate. I am happy to be corrected by those abroad!

    Leave it in the pension pot (and keep adding to the pot) for when you return in a few years time, at which point your pension pot will be larger, you will be older and annuity rates might have returned to where they should be - around £1000-1500 higher than those figures.

    In theory, you can also buy an annuity without using a pension fund but I don't think that is the usual way of doing things.

  7. Get a SIPP. check out the arrse financial forum. some good advice.
  8. BiscuitsAB

    BiscuitsAB LE Moderator

    Is this a Pension Annuity you're talking about?

    If so yes you can have one at 55 and still carry on working. You can also put the mess webley to your head and pull the trigger! Both make about as much sense.