We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
Question re SIPP drawdown
itm2
Posts: 1,512 Forumite
I have a question regarding how SIPP drawdown works in practice. I understand that:
- government limits are placed on the amount of drawdown that can be taken each year (based on the amount left invested after any tax free lump sum has been withdrawn)
- these limits are calculated, with determining factors including the age of the individual and gilt yields
- drawdown limits are reviewed for each individual every 3 years.
What I'd like to know is: when a drawdown limit is set (both at the initial review and at subsequent reviews), does this set a fixed % drawdown amount which remains in effect until the next review? Or does it set annually increasing limits until the next review? (e.g. £43 per £1,000 in year 1, £44 per £1,000 in year 2 etc)?
- government limits are placed on the amount of drawdown that can be taken each year (based on the amount left invested after any tax free lump sum has been withdrawn)
- these limits are calculated, with determining factors including the age of the individual and gilt yields
- drawdown limits are reviewed for each individual every 3 years.
What I'd like to know is: when a drawdown limit is set (both at the initial review and at subsequent reviews), does this set a fixed % drawdown amount which remains in effect until the next review? Or does it set annually increasing limits until the next review? (e.g. £43 per £1,000 in year 1, £44 per £1,000 in year 2 etc)?
0
Comments
-
It's a fixed cash amount based on the value of funds at review date multiplied by the rate applicable on the the Govt drawdown table (renewable, as you say, 3 yearly max)0
-
I can tell you what happens to mine, as you say, it's reveiwed every 3 years and the SIPP providers tells you that you can take £x. That remains £x year2, £x year 3. No inflation. It is fixed in £s
Paul0 -
What I'd like to know is: when a drawdown limit is set (both at the initial review and at subsequent reviews), does this set a fixed % drawdown amount which remains in effect until the next review? Or does it set annually increasing limits until the next review? (e.g. £43 per £1,000 in year 1, £44 per £1,000 in year 2 etc)?
The maximum amount will be fixed at the date you start. You can take any amount up to your maximum as you choose - it is flexible, so you can take a lesser amount in the first year but if your portfolio does well and you build up a good surplus, you could take more the next year.
After three years, the situation will be reviewed and the next maximum figure will be set.We have a climate emergency and need to re-think investing strategies to avoid sectors that are part of the problem such as oil & gas and embrace climate-friendly options such as renewable energy.0 -
The 3 year review can actually take place at the end of any year.
If you think the increased GAD rate will benefit your maximum income, you can ask for a review early.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 354.3K Banking & Borrowing
- 254.4K Reduce Debt & Boost Income
- 455.4K Spending & Discounts
- 247.3K Work, Benefits & Business
- 604K Mortgages, Homes & Bills
- 178.4K Life & Family
- 261.5K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards