Drawdown or UFPLS

Moby

Despite reading through various articles I'm still naive about this choice? I'm putting funds into a SIPP and the SIPP will be my major source of income when I take early retirement in a years time to bridge the gap until I take a Local Govmt pension in my 60's.
The SIPP is only meant to see me through for 5-6 years until the defined benfit pension kicks in. DOes it really matter whether I choose drawdown or UFPLS. I understand with UFPLS you only crystallise part of the pension and the rest stays invested and hopefully grows.....but then I read you can put part of a pension into drawdown and the rest of it can stay invested. Is that right and if so what's the difference? I'm confused!

xylophone

https://www.accountancylive.com/drawdown-or-ufpls-which-best-new-pension-freedoms

might help.

mania112

I really don't know why UFPLS was introduced, the differences are so minimal it's not worth the hassle figuring out which is best. I'm sure there's a decent reason, but I don't know it.

You might find your SIPP provider will only offer drawdown, so problem solved!

Otherwise, if you intend to take 25% from the whole SIPP on day one, Drawdown is the way to go - UFPLS will pay you out the remaining 75% too, taxed.

brewerdave

The UFPLS has benefits if you don't need an income from the SIPP because you have other adequate pension provision but have an immediate need for capital and don't have other savings available at the time.
You can leave the remnant to grow and then still take 25% tax free at a future date - at least thats how it was explained to me !:)