SIGN UP

Pension Fund

Avatar Image
petesgrayz | 09:19 Sat 28th Jul 2018 | Business & Finance
9 Answers
If you have £120,000 in a pension fund approximately how much could you expect as a monthly income.

Answers

1 to 9 of 9rss feed

Best Answer

No best answer has yet been selected by petesgrayz. Once a best answer has been selected, it will be shown here.

For more on marking an answer as the "Best Answer", please visit our FAQ.
I assume you are talking about buying an annuity. Depends on your age and whether you want spouse to receive an income for life if you die first and whether you want it uprating by inflation. I would say that £120000 would give around £250 a month.
There are some annuity calculator /quote sites
The figures do look very low. Remember they may have to have tax deducted to if yoour income with the pension income exceeds the threshold.
Sometimes it's better to draw the maximum tax free lump sum (maybe £30000 here) and bank this then draw down on it, and then buy an annuity or draw-down plan with the rest
If it's an employers pension though you may find you get more as the rules were often set well before average life expectancy shot up and before annuity rates plummeted
I've no idea but would guess;

120k x 5% (say) = 6000 / year.
Ignoring tax 6000 / 12 = £500 a month.

But who knows what average returns will be in the future. Are they negative yet ?
Its important too that once you start drawing from the fund, the balance remians invested and continues to grow for you, somewhere safe and low risk. If for example you take £10k in the first year in monthly income, you still have £110k that could be earning a percentage of that money back.

Please take some independent advice.
Annuity rates for someone age 60-65 are a lot less than 5% though O-G, even if you don't want the income to go up each year in line with inflation.
I think the rates now are so low it is better to draw down. i agree with financial advice but it can be expensive and would probably take up maybe £2000 of yur fund straightaway plus ongoing charges.
If you go to https://www.moneywise.co.uk/pensions/best-annuity-rates-month and click on the spreadsheet guide, you can open up an excel chart which will give you an idea of what you can get per year. They are discussing a £50,000 pension pot. But whatever you do make sure you get professional advice first.
If it is a final salary scheme you are in think very carefully before taking the money out.
This is a question that cannot be answered without knowing a lot of other information, as FF has indicated. It very much depends on individual circumstances. Use of the following link might help,

https://www.pensionwise.gov.uk/en/appointments
Quote (from the Gov.uk website):
"How much income you get each year from an annuity depends on things like:

how much you had in your pension pot when you bought the annuity
your age
whether you want the income to increase each year
whether you want the annuity to pay out to someone after you die
your health and lifestyle

You may have to pay administration fees"

Source:
https://www.pensionwise.gov.uk/en/guaranteed-income#how-an-annuity-is-calculated

There's a basic calculator provided on that Gov.uk page. For a more detailed one, try this:
https://www.aviva.co.uk/pac/

1 to 9 of 9rss feed

Do you know the answer?

Pension Fund

Answer Question >>