Starting Crystallisation/Drawdown

kidmugsy

Gatser wrote: »

... pension contributions for my wife.
I assume she should then withdraw that money before her state pension kicks in and uses up her tax allowance...?

That's the way to do it.

kidmugsy

Gatser wrote: »

To be clear....
If I just take the 25% TFA, does it make any difference whether I do this pre or post April 2015?

It makes no odds, except that

(i) Firms may conceivably change their charges for next tax year (conceivably up, conceivably down, conceivably a mix of both)
(ii) Doing it this year will mean you have to pay for a GAD calculation (which might not be material if your fund is large)
(iii) Not all the legislation is through yet (as far as I know, but I may not be up to date) so there's a small element of guessing.

If you don't feel impatient you could always wait for the Chancellor's Autumn Statement in a month's time, just as a precaution.

jamesd

Taking the 25% this year from any pot and also putting it into capped drawdown will do it. You must say that you want it put into capped drawdown, even if not taking an income, because providers are allowed to give you until the new rules take effect so you can wait if you want. And you don't want that because you need to start drawdown this tax year, not next.

Gatser

Another thought...
I assume it would be better to drawdown on a monthly basis so that the various SIPP funds are converted to cash over a period of time rather than in one or two hits in a year.
Am I being sensible? thanks for your comments

greenglide

Would it not depend on whether there is a charge per payment?

Also you may wish to protect the capital value of the fund by only withdrawing money from the underlying funds during the "good" times? How you would know what is a "good" time is debatable but you wouldnt, necessarily, want to withdraw money automatically immediately after a stock market crash.

sandsy

Do you need TFC more or income more? If the latter, you ought to be looking at UFPLS too as an alternative to drawdown after April.

Linton

Gatser wrote: »

Another thought...
I assume it would be better to drawdown on a monthly basis so that the various SIPP funds are converted to cash over a period of time rather than in one or two hits in a year.
Am I being sensible? thanks for your comments

The way I handle the problem of it being a bad time to sell equities is:
1) Withdraw money from the SIPP annually taking the maximum without going into HRT.
2) Hold cash outside the SIPP to cover 3 years income. Non SIPP wealth beyond that goes into S&S ISAs.
3) Hold lower risk funds (eg bonds, wealth preservation ITs, absolute return funds) in the SIPP sufficient to cover a further 5 years income.
4) The rest of the SIPP can be 100% pretty high risk equity investments.
5) Review and rebalance the SIPP once a year. If times were bad I would allow the 5 year funds to drop over time without replenishing from the higher risk investments.

In this way if the markets really crashed I neednt sell equity funds for up to 8 years.

jamesd

Gatser, I'd wonder about charges for a lump sum or for changing a monthly payment, since one of them would be needed. No major difference apart from charges and the potential market timing issues. Linton appears to have a good process.

Gatser

Many Thanks... plenty to think about and plan for (carefully)
(and I thought building up the pension was the main challenge!)