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New Pension Rules
Comments
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gadgetmind wrote: »Thanks for the clarification.
It seems to be that UFPLS might have well been called "USELESS" as it doesn't seem to provide anything that the new uncapped drawdown and phased crystalisation can't.
Or is UFPLS (pronounced "USELESS" :-) just to make life a bit easier for pension companies who still use FORTRAN and punched taped on their computer systems?
Anyone on such a platform has probably got grim fees and lacklustre investment options, so moving and using drawdown (with phasing if they must) if probably a better option for most.
Actually I was thinking that the UFPLS option was the better one assuming you don't need 25% of the fund as a lump sum. The reason is given in that link I provided. The whole of the remainder of your pension under UFPLS goes to your estate if you die whereas under drawdown 55% is currently taken as tax !!0 -
The whole of the remainder of your pension under UFPLS goes to your estate if you die whereas under drawdown 55% is currently taken as tax !!
Not totally accurate -
1) You can currently used phased drawdown. This means that some of your pot is crystalised, so within your estate, with 25% PCLS paid and in drawdown, but the rest is uncrystalized. This is exactly how things work with UFPLS.
2) Even the part in drawdown can be used by a dependent for income, so no 55% tax.
3) That 55% tax is likely to be reduced anyway.
UFPLS gives me more options, but I can't see why I'd use them. Why not take the full PCLS (before that option may be removed), invest that 25% in my wife's name for untaxed (for her) dividend income (and transfer this to ISAs ASAP) and use the remaining 75% for drawdown?
OK, I'll have to juggle a little regards income and CGT, but that's no great stretch.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »Not totally accurate -
1) You can currently used phased drawdown. This means that some of your pot is crystalised, so within your estate, with 25% PCLS paid and in drawdown, but the rest is uncrystalized. This is exactly how things work with UFPLS.
2) Even the part in drawdown can be used by a dependent for income, so no 55% tax.
3) That 55% tax is likely to be reduced anyway.
UFPLS gives me more options, but I can't see why I'd use them. Why not take the full PCLS (before that option may be removed), invest that 25% in my wife's name for untaxed (for her) dividend income (and transfer this to ISAs ASAP) and use the remaining 75% for drawdown?
OK, I'll have to juggle a little regards income and CGT, but that's no great stretch.
NOPE. According to the example on:
http://www.scottishlife.co.uk/scotlife/web/site/Adviser/News/August2014/1408UFPLSexplained.asp
If you take the full 25% tax free under drawdown then the whole of the remaining pension is crystalised and subject to 55% death duties. In the example, £10000 is taken but the crystalised fund is £40,000.0 -
If you take the full 25% tax free under drawdown then the whole of the remaining pension is crystalised and subject to 55% death duties.
Agreed, but that wasn't the case I was discussing. Note that my example (1) says "some".I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Not if you have a dependent as they can choose not to take the lump sum, and continue drawdown which is not taxed at 55%, but at the dependent's income tax rates.NOPE. According to the example on:
http://www.scottishlife.co.uk/scotlife/web/site/Adviser/News/August2014/1408UFPLSexplained.asp
If you take the full 25% tax free under drawdown then the whole of the remaining pension is crystalised and subject to 55% death duties. In the example, £10000 is taken but the crystalised fund is £40,000.
Please read those websites with care, as they are intended for adviser use only. You seem to jump to a lot of conclusions very quickly.Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0 -
gadgetmind wrote: »Agreed, but that wasn't the case I was discussing. Note that my example (1) says "some".
Well if you are only taking 'some' then why do you say that UFPLS is useless? It is better surely to use UFPLS and have no crystalised pension avoiding tax if you die is it not?0 -
gadgetmind wrote: »Or is UFPLS (pronounced "USELESS" :-) just to make life a bit easier for pension companies who still use FORTRAN and punched taped on their computer systems?
Anyone on such a platform has probably got grim fees and lacklustre investment options, so moving and using drawdown (with phasing if they must) if probably a better option for most.
That seems to be the aim - essentially a way that schemes can offer partial lump sums without having to set up drawdown functionality and differentiate between crystallised and uncrystallised segments.
Whether many schemes choose to offer it as an option remains to be seen, as well as how exactly it works in practice. I would say that people looking to phase their retirement and actively manage their fund are best served by a drawdown provider with full flexibility on income, slick administration, wide fund choice and low charges. UFPLS is probably best served for people who need a one-off lump sum at some point, rather than a phased retirement strategy.I work for a financial services intermediary specialising in the at-retirement market. I am not a financial adviser, and any comments represent my opinion only and should not be construed as advice or a recommendation0 -
a way that schemes can offer partial lump sums
Something which is really easy and they should have been doing already to cover existing freedoms that have existed for many years.without having to set up drawdown functionality
Something which is really easy and they should have been doing already to cover existing freedoms that have existed for many years.and differentiate between crystallised and uncrystallised segments.
Something which is really easy and they should have been doing already to cover existing freedoms that have existed for many years.
Sorry, those providers who've let their systems fester such that they can't handle this should be forced to play catch up on their investment such that they can. Saying "oh, our Sinclair Spectrums aren't up to providing the freedom the law allows" doesn't cut it given that the latest changes wouldn't be that tricky if they hadn't deliberately mired themselves in the dark ages of one-off annuity purchases.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Your Hero - thanks.
Could you clarify, and add, a few things for me please.
I believe I understand the process to put my pension into flexible drawdown - transfer the stakeholder to a SIPP invested in a fund.
As far as I can make out, I'd have to pay a one off SIPP set up fee, an annual admin charge, and a drawdown transaction charge. There's the fund 1.475% charge too, but I've always viewed this as reasonable.
So now the questions please...
The thing you suggest UFPLS appears to be the same (similar) to partial drawdawn (supported against SIPPs too), and I'd always assumed a similar fees regime would operate.
So what might be the difference between UFPLS and Partial Drawdown and what might be the difference in fees charged to get at my own money.
Could you also tell me whether there'll be fees to take the whole fund, and if there's a difference, explain why the differences in fees might apply say between Full UFPLS, partial UFPLS, Partial drawdown.
Many, many thanks.0 -
By partial drawdown, I'm assuming you mean 'phased drawdown'? The main difference is that drawdown creates a crystallised pension fund, even if you designate a small portion. UFPLS is a straight withdrawal and does not 'crystallise' your pot.BazzerPontefract wrote: »So what might be the difference between UFPLS and Partial Drawdown and what might be the difference in fees charged to get at my own money.
Phased drawdown is also a more complex arrangement and costly. For instance, you could use the designated funds to buy an annuity or capped drawdown. You would not normally consider phased drawdown unless your pot is sufficiently large (probably £200k or more) otherwise it would not be cost-efficient.
We have yet to see what fees UFPLS would incur, but I would imagine it would not be as much as drawdown as it's a simpler process.Could you also tell me whether there'll be fees to take the whole fund, and if there's a difference, explain why the differences in fees might apply say between Full UFPLS, partial UFPLS, Partial drawdown.
Many, many thanks.Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0
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