The Anonymous Widower

Victoria Asks The Question

Victoria Derbyshire asked this morning how George Osborne’s pension changes will affect you.

They won’t effect me, but they will effect those companies that provide the dreaded annuities, as I won’t be buying one!

I will be putting money into a peer-to-peer lender like Zopa, to provide me with a flexible income.

Suppose you had £50,000 invested in Zopa and it was generally lent out at 5% for five years. This money would be safeguarded by Zopa.

Once it was fully lent out, you would get an interest payment of £2,500 each year and capital repayments of £10,000 a year.

So in other words, you could withdraw £12,500 a year with no trouble.  But if you didn’t and left it to accumulate in Zopa you would be earning more money.

Obviously, you would have to pay tax on your earnings, but the idea of using Zopa or one of their ilk, as an annuity could turn out to be a good one.

There is a rumour doing the rounds, that peer-to-peer lenders will be starting to productise their offerings, by creating specialist ISAs and flexible on-demand deposit accounts.

April 4, 2014 - Posted by AnonW | Finance & Investment, World | Peer-to-Peer Lending, Pensions, Zopa