ARF vs buying annuity in current climate

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Lucyfarr

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As a 70 year old couple with one moderate annuity pension from work, one state pension( OAP) and one private ARF pension,we're wondering about converting the Irish Life ARF to an annuity. It's about €250k, reducing each year via withdrawal of 4%. We have no expertise in managing the ARF, but fear there will be very little or nothing left in later years, and at least there would be some guaranteed income with an annuity. Is it a good or bad time in current financial climate to look at buying an annuity?
 
This came up a few times recently.

Key Post - People should consider buying an annuity on retirement

Why an Annuity matters to an ARF investor How should one approach investing an ARF? As we set out in our [broken link removed] for retirement planning in Ireland, an investor’s risk tolerance is only one of several factors that go into the decision to go into an ARF. A far more appropriate...
www.askaboutmoney.com

Life - Are annuities still available these days on the Irish market?

Are annuities still available these days on the Irish market ? If so ; 1. What are the returns like ? 2. Is capital deposited to buy the annuity secure / guaranteed or at any risk ? I had one some years ago with Norwich Union in Ireland. I had a lump sum for which I wanted a home for about 5...
www.askaboutmoney.com

Case study - ARF v Annuity

I know this an old chestnut but maybe the landscape is changing. I'm 59 and plan to begin drawing a pension from a pot forecasted to be worth €540,000, in just over 2 years time. I'll be 61 then and plan to withdraw the 25% TFLS which will leave me with c€400,000 to invest. Any time I've...
www.askaboutmoney.com

Annuities - impact of recent rate rises

As interest rates are starting to rise again, at what point will annuities start to become attractive again, and how far away are we ? I had just assumed I would be going down the ARF route when the time came, but the interest rate landscape might well be very different over the next 5 years...
www.askaboutmoney.com
 
Imputed distributions from an ARF actually increase to 5% from 70.

I think it’s fair to say that annuities represent a far better proposition today than they did a few years ago, particularly given your age.

Definitely worth a discussion with your broker.
 
Lucyfarr
Annuities have certainly become more attractive following the recent rise in interest rates. The attraction of Annuities is that they offer income certainty, but it does mean that you lose control of the capital sum.
If you buy a single life Annuity (based on one life only), you will certainly get an Annuity rate over 5% (more than the minimum drawdown from the ARF). If you go for a joint life Annuity the figures will be lower.
A important factor will be your state of health. If your health is good and family history is good, then an Annuity might be a reasonable bet. If not stick with the ARF.
If sticking with the ARF you need to consider your investment strategy. Investing in Cash (say) will generate a very low return and with a 5% drawdown, the net result will be a gradually reducing ARF pot. Taking a less conservative investment strategy might generate a better long term return but involves investment risk, which might or might not pay off.
You need to get professional advice and run the numbers.
 
Plus, annuities normally cease on death while an ARF can be inherited. The threads that I linked above go into a lot more detail on this and other relevant issues.
 
Lucyfarr said:
As a 70 year old couple with one moderate annuity pension from work, one state pension( OAP) and one private ARF pension,we're wondering about converting the Irish Life ARF to an annuity. It's about €250k, reducing each year via withdrawal of 4%. We have no expertise in managing the ARF, but fear there will be very little or nothing left in later years, and at least there would be some guaranteed income with an annuity. Is it a good or bad time in current financial climate to look at buying an annuity?
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Thank you Clubman, I should have spotted those,forgive me, I'm a newbie here
 
@GSheehy previously posted this in another thread in case the annuity calculator linked there is of any use just for rough indicative purposes.

Maturing pension / Buyout Bond at age 50: two options, annuity versus ARF versus lump-sum

Person coming up to age 50, currently employed in public service. Previous DC pension from previous employment is currently in a Standard Life Buyout Bond. Value is 48k. Person wants to get access to some cash, as far as I know, and has been presented with these two options by Standard Life...
www.askaboutmoney.com
 
Sarenco said:
I think it’s fair to say that annuities represent a far better proposition today than they did a few years ago, particularly given your age.
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Or have rates just adjusted upwards in line with greater expected inflation?

Is there better value in inflation-adjusted terms?

If there is I’d be keen to see it.
 
We did a quote yesterday for a client and Irish life were 0.268% less than the leading provider in the market.

€268pa more for life for every 100k of pension from shopping around
 
Marc said:
We did a quote yesterday for a client and Irish life were 0.268% less than the leading provider in the market.

€268pa more for life for every 100k of pension from shopping around
Click to expand...
Just to be clear, I only linked to the post with the Irish Life annuity calculator because I believe that it's the only public one available and it was provided, as I stated, for rough indicative purposes. It wasn't an endorsement of Irish Life just in case anybody thought that it was.
 
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