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[LC0112G]

Ron:
I think if you have already purchased an annuity then you are probably in it for the long haul. I think you can “sell” your annuity in exchange for a lump sum, but it would be hard to know if that’s a good deal or not without seeking an IFA’s advice (instinctively though I think you might get shafted).

No - that idea was mooted by the govt in about 2012 but then firmly booted into the long grass. The return values were going to be laughably small and the number of people who would 'benefit' vanishingly small. If you have bought an annuity then that's it - booked and bound.

Is there anything that I can do, having been retired for over 10 years, or is it way to late and/or no options anyway?

No-one can tell without knowing a lot more personal details. However, most pension decisions need to be taken before you start drawing your personal/work pensions. Once you've started taking the money then the decisions are cast in stone.

One thing you may be able to do (if you reached SPA before 2016) is defer your state pension. You can do this even if you have already started taking it. The govt will increase your SP by 1% for every 5 weeks you defer, which works out at 10.4% per year. So if your current weekly pension is (say) £100 and you defer for (say) 5 years, when you restart it you will receive £164 p/w.

Obviously you need to have enough money in savings or income to live during that deferred period, but 10.4% from the govt versus what? 1%-2% from savings interest usually makes deferring and  using savings instead preferable.

[Bigron]

Thanks, LC, but that last bit is not an option - I need all the pennies I can get, being as poor as a church mouse!
It's what you get from a lifetime of hard graft and being financially inept.....

Ron.

[Mister Rog]

Just to demonstrate how ignorant I am in these matters, what's an annuity and how would I know if I've got one?
All I know is that I have a State Pension and a small occupational one.
All the complex manipulations talked about in the posts above leave me bemused/confused and way out of my depth. 

Ron.

Join the club. Me too.

This is exactly my point in an earlier comment. It should be easy and simple.

[Bigron]

Thanks Rog - not just me then? 

Ron.

[Viral_Jim]

Just to demonstrate how ignorant I am in these matters, what's an annuity and how would I know if I've got one?

An annuity is what your man in the street refers to as a pension, i.e. a monthly/weekly payment which is made to you. The pension is the pot of money you build up during your working life.

For example, let's say you reach retirement age and have built up a pension "pot" of £50,000. This pot will be held on your behalf by a pension provider (eg. Aviva, Standard Life, The Pru etc) and will usually be made up of your contributions and your employer contributions (plus the tax savings). At that point you have a number of options, you can take some of it as a tax free lump sum (typically max 25% although I think you can take more if your pot is small), you can take that money and put it into a Self Invested Pension Plan (SIPP), or you can do what most people seem to do, and buy an annuity with it.

An annuity is basically a contract between you and an annuity provider (which could be the same company that holds your pension pot, but it typically pays to shop around). The contract says that, in exchange for your £50,000 they will pay you an amount (say £75) per week/month for the rest of your life. The annuity provider will take into account a number of factors (age, weight, smoker, general state of health etc) to make a guess at when you'll die and then calculate how much money it'll pay you based on that. Basically, if they think you'll be dropping off the perch before the end of the decade, you'll get more money than if they think you'll see 100.

[LC0112G]

Just to demonstrate how ignorant I am in these matters, what's an annuity and how would I know if I've got one?

An annuity is what your man in the street refers to as a pension, i.e. a monthly/weekly payment which is made to you. The pension is the pot of money you build up during your working life.

For example, let's say you reach retirement age and have built up a pension "pot" of £50,000. This pot will be held on your behalf by a pension provider (eg. Aviva, Standard Life, The Pru etc) and will usually be made up of your contributions and your employer contributions (plus the tax savings). At that point you have a number of options, you can take some of it as a tax free lump sum (typically max 25% although I think you can take more if your pot is small), you can take that money and put it into a Self Invested Pension Plan (SIPP), or you can do what most people seem to do, and buy an annuity with it.

An annuity is basically a contract between you and an annuity provider (which could be the same company that holds your pension pot, but it typically pays to shop around). The contract says that, in exchange for your £50,000 they will pay you an amount (say £75) per week/month for the rest of your life. The annuity provider will take into account a number of factors (age, weight, smoker, general state of health etc) to make a guess at when you'll die and then calculate how much money it'll pay you based on that. Basically, if they think you'll be dropping off the perch before the end of the decade, you'll get more money than if they think you'll see 100.

For clarity's sake perhaps the following should be made clear :

During the accumulation stage of your pension 'life', someone (you, your employer and/or the govt) pays into your pension "pot". As you change jobs you may accumulate several different "pots" with different employers. You can usually keep these all separate, or opt to merge them into one larger pot - it's up to you. The value of the pots will grow or fall in line with the assets held in the pots - stocks and shares, funds, bonds, cash etc)

When you come to retire, you can chose to buy an annuity with some or all of the assets contained in some or all of the pots.  An annuity is a contractual promise (usually with a big insurance co) to pay you an income for the rest of your life. Once you buy an annuity, the money/assets in the "pot" is gone - to the insurance company. You can't get the money/assets back, and you can't sell or surrender the annuity for cash in the future either. On the other hand, the insurance co can't stop paying you the promised income till you drop off the perch. 

Prior to about 2006, just about everyone had to convert their pension pots into annuities. However, nowadays there are many more options, and many more flavours of annuity too. AIUI less than 50% of people now buy an annuity with their pension pots. However, it's still true that once you've bought an annuity that's it - your pot of money/assets is gone.

[Varche]

Thanks, LC, but that last bit is not an option - I need all the pennies I can get, being as poor as a church mouse!
It's what you get from a lifetime of hard graft and being financially inept.....

Ron.

Rog/Ron Don't forget that your zimmer frames and the like are VAT exempt (or can be) . I know it isn't much but all savings are welcome.

[Migv6 le Frog Fan]

Another option now available (although probably an unwise one for many) is to withdraw all or part of your private pension pot as cash, once you are over the age of 55 iirc.
You will be taxed on it as income though if you do.

[LC0112G]

Thanks, LC, but that last bit is not an option - I need all the pennies I can get, being as poor as a church mouse!
It's what you get from a lifetime of hard graft and being financially inept.....

Ron.

Ok - how about this one. Open a low cost SIPP pension with someone. Pay in £2880 between now and 6/5/2018. The pension provider will reclaim 20% tax from the govt, and top the £2880 up to £3600 (may take a couple of months). Then when the tax refund lands, withdraw the whole £3600. 25% (£900) will be tax free, and the remainder (£2700) will be taxed as income at 20% so you'll pay £540 tax and get £2160 back. Add that to the tax free cash, and you'll get £3060 back from your £2880 initial stake - £180 profit.

If you have any of your £11850 personal allowance remaining then some/all of the remainder (£2700) will be tax free too. There is a whole thread on it over on MSE, and it gets you up to £720 "free" money every year.  http://forums.moneysavingexpert.com/showthread.php?t=5580163

Then rinse and repeat in 2018/19, 2019/20 etc. All perfectly legit and above board.

[Bigron]

Coo - too good to be true? Any pitfalls, especially for an ignoramus like me?

Ron.

[LC0112G]

Coo - too good to be true? Any pitfalls, especially for an ignoramus like me?

Ron.

You need to be more than 55yo, but less than 75yo. The pension provider may make some charges for opening/closing the account, and HMRC can get their knickers in a twist if you take the (£2700) balance out in one lump. If you read the MSE thread they'll help you chose the best suppliers and show you how to keep HMRC from making a Horlicks of it.

Other than that - no real issues. You can also do the same for SWIMBO - assuming there is one and she is 55-75. £180/£360 should keep you in Wurthers Originals for a while 


Oops - just noticed - the Tax year is 6/4/2017 to 5/4/2018, so you need to make the £2880 payment before 6/4/2018 (not 6/5/2018)

[Bigron]

Thanks LC, very much worth pursuing. I am 29, going on 74!
My Wurthers Originals have to be the sugar-free version these days - diabetes. 

Ron.

[Viral_Jim]

My Wurthers Originals have to be the sugar-free version these days - diabetes.

That’s just cruel!