Pension pot

By THIS IS MONEY
Updated:

 

I HAVE an AVC with Norwich Union. From a fund of £15,329.76, they are offering me a pension of £743.57 per annum. They say this will be payable for at least five years and will continue for the remainder of my life. Is this a good offer, or could I get better elsewhere? MP, Bristol.

Danny Cox, pensions development manager at Hargreaves Lansdown says: Assuming you are retiring from your main company scheme at the same time, you have the right to search the open market to get the most competitive income rate that you can for your pension pot.

Some IFAs will help you do this, but most usually charge a fee if your fund is less than £40,000. However, at www.hargreaveslansdown.co.uk, you can compare what income you will get from your pension pot online for nothing, regardless of its size. You can only take the benefits from your AVC if your main scheme allows it but presumably it does since NU is offering you a separate quote for this.

The rate it is offering is equal to 4.95% and I would say this is beatable, so it is worth shopping around. The rate also suggests you may be young - perhaps only 50 - so bear in mind that the income you accept now will be in payment for perhaps 30 or even more years. This means its buying power is likely to drop considerably over that time so consider taking an inflation-proof deal - it will be lower at first but you will feel the benefit later on.

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