Private pension worth £8000+.

Is it £8000 a month or a one off lump sum of £8000?

Your annuity would probably only get you around £250 per year. If you have other pensions you might also be paying tax on it.
£20000 worth of PBs would produce some wins, a gamble, but on a good year you could surpass £250.

Aveline

Is it £8000 a month or a one off lump sum of £8000?

£8000 lump sum

Well at £250 a year it will take 32 years to get your money back in pension.

So do you think you’ll live longer than that?

Is it inflation proofed?

How likely are you to need £8000 for something in the future? You can take it out of premium bonds but you can’t take it back from an annuity.

Does that help?

Too small for an annuity.
Put it in an easy access account then drip feed it monthly into a couple of top paying Regular Savings accounts. Check MSE forums for the best ones.
Then treat yourself in a year’s time.

I had a very small pension pot (£20000) (working as my husband’s underpaid practice manager). When I divorced. I was allowed to take out 25% ie £5000. The rest had to go into an annuity. I chose a fixed rate. For the past 20+years , I have been receiving £96 per month. So, it’s not too bad a decision.
Ohmother - it depends on your age.

What a result!!! All these sensible answers! I’ve been pushed about and given lots of phone numbers to ring today from the place I have my pension. Im rubbish at anything like this and am feeling fractious and exhausted. I am now going to bed to sleep today away. I’m feeling less fretful. THANK YOU ALL. ❤️

I’m retirement age this year.

It does 😁

The above is the answer to ‘Does that help?’ I must go to sleep.

I had £15,000 in AVCs years ago.
It bought a tiny annuity and the interest rates were higher than now. I wish I been able to cash it in.

I chose a fixed rate. For the past 20+years , I have been receiving £96 per month.
So did I and shopped around but I only get about £70 per month and that's before tax.

You could win £1 million!!

I personally would not buy an annuity because, as others have said, once invested, you cannot touch it.

I would look around for the highest-paying fixed-rate savings accounts and drip-feed the maximum, usually £250, into each account monthly. At least in a year's time you would have £8K+ the interest.

I have not worked out the maths, but you should manage a couple of savings accounts. Good luck.

My pension was a similar amount. I drew it all and invested in premium bonds although I have now withdrawn a few.

I win small regular prizes and worked out over the years a much bigger interest than I would earn in any savings account.

I had a pension worth about £5000 from a previous employer. I already had a SIPP opened with another old pension transfer plus a redundancy lump sum, I just transferred the small pension lump sum into the SIPP, it was incredibly easy.

It really depends on your age. At 60 it’s possible the annuity might have to pay out for 30 years, so it wouldn’t pay much per month, while not buying until your mid 70’s would produce a better figure. My FA told me the optimum time to purchase an annuity was between 72-74. I decided against it, stuck to a draw down pension and the DDs can inherit what’s left, less taxes.
Buying an annuity is similar to buying shares - it is what it is on the day. A few days before might have been a poorer purchase, a few days after, better, or vice versa. Worth remembering it’ll die with you and the monthly income added to your DWP will incur income tax.
I’d always take the 25% cash free option first.

Woke up to some more brilliant help and in a better state of mind. Thank you so much all. ❤️

You will probably get a higher interest rate if you invest in 1-5 year bonds. The longer the bond. the higher the interest. All reputable banks and savings institutes offer them.

Put what ever product you buy into an ISA and your interest will be tax free.

Look at Martin Lewis site www.moneysavingexpert.com/

If you take the money and invest it, however you decide, then you will receive a return on the money and the original sum will still be yours, or part of your estate. If anything should happen to you, I think within two years, (heaven forbid!) and you have bought an annuity, that money has gone.

I agree with many above.
As a rough guide, an annuity will pay around 4% of the lump sum, annually, for lif
e. This will be taxed. So will make little difference to your life style.

In my opinion, you are better to invest in a bank account paying a decent level of interest.

I'd buy Premium Bonds.
A little excitement every month does us good 😁

My private pension matured a couple of years before you were allowed to take more than 25% out of it and had to buy an annuity. If I’d had a choice I’d have removed it all and put it in an ISA or part in PBs

Nationwide have a savings scheme where you can put £200 max in each month for one year @ 6.5% ( but you have to be a member). You could put the money into and instant access saver, lower interest and use it to pay two hundred a month. You could put it in an ISA but you may need the money for unexpected bills if something major breaks down like a washing machine.

Good, comprehensive answer

Hi. I cashed in a small private pension worth c. 10k last year. It would have provided an annual pension of £350.
One thing to note is that 25% will be tax free, the rest will be taxed so you will not receive the full £8000.
You will receive 25% tax free, the rest will be taxed at 20% and/or 40% depending on your income. Initially, however, the lump sum will incur some of the monies taxed on the emergency tax code. The overpayment in tax will be reimbursed sometime by HMRC.
There is a form you can complete to receive a refund (think within 30 days) or you can wait for the tax man to do at the end of the tax year.
I cashed mine in as I reckoned I was better off paying the tax rather than risking living long enough to get the value of the policy.
Rgds