Standard Life pension question

ArmyDilllo

Hi,
Have two questions regarding pensions and, more specifically, Standard Life's pension range.
Appreciate your input, if you have any.

Background:-
I have retired early (was 57 on 7th Feb).
I have sufficient savings and investments to comfortably support the rest of my life and leave a sizeable chunk to my estate.
I live well within my means (my retirement income exceeds my outgoings) and most of my investments are via tax-free vehicles (Share ISA's and Investment Bonds).
I have a number of pensions but want to use one SIPP I hold with Std Life to get me to 2026, when my state pension will kick in.
My other pensions will be left alone to grow, unless my plans don't work out; In which case they will become my, "Plan B".

Essentially I will be draining my Std Life pension, using my personal income tax allowance each year until it is exhausted.
If there's anything left by the time my state pension kicks in, it will be left and forgotten about, for my beneficiaries.

I do NOT want to take a 25% tax-free lump sum from it.
That would fix the sum at the value of the pension now, rather than growing with it.

Instead I want to take a monthly income of £958.33 (x12 months = £11,500.00; my annual personal income tax allowance) and add 25% tax free to that, making my monthly pension income of £1,197.92.

Question:-
I believe that, in order to operate withdrawals in this way, I need a UFPLS (Uncrystallised Funds Pension Lump Sum) pension.
When I mention that term to Std Life they do not seem to be at all familiar with it.
Instead, offer me their "Active Money" alternative.

Having it explained to me and reading up on it, "Active Money" seems to serve the same purpose as I require from a UFPLS pension.

• Is Std Life's "Active Money" pension essentially just their in-house brand name for U.F.P.L.S.?
• Will it fulfil the purpose I require (25% tax free lump sum withdrawals, adjustable for a changing personal tax allowance)?

Thank you in advance for your suggestions and contribution.

ArmyDilllo

Oh, I should also mention that, whoever I speak to at Std Life they do not seem to recognise the term UFPLS.
I am 99% decided that this is the withdrawal service I require so, unless their "Active Money" is just another name for this, I would need to transfer that pot to one of my other providers to... provide it for me.
I want to begin withdrawing from it this tax year so I can take as much as I can from it, without involving HMRC's sticky little fingers.
That puts a time-constraint upon this line of questioning.

Linton

Having read the documentation, how I think the SL scheme operates is that you do take the full 25% tax free at the outset but SL then manage the tax free money and the money inside the pension as separate pots paying you a bit of each every month or whenever. So it's a somewhat clunky implementation that has been made unnecessary by UFPLS. I cant see how it could provide the IHT advantages of UFPLS.

Bringing in real UFPLS will require changes to SL systems which must take some time to implement.

Your alternative is to transfer the money to a platform that offers real UFPLS now such as a SIPP.

ArmyDilllo

Cheers Linton.
Yes I didn't want to fix the 25% from the start date and that was my concern with this (although the guy at Std Life, seemed to indicate his understanding that I did not want that).
I would have rather stuck with them as I like the way they've invested it on my behalf to date, but I do manage my other investments and am comfortable doing that.
My other [main] provider is Aviva who do operate a full UFPLS, so that's my other option.
I'll check this out some more before switching to a UFPLS provider.
Thanks for yr prompt response.


:beer:

dunstonh

Have two questions regarding pensions and, more specifically, Standard Life's pension range.

It should be noted that their pension range probably numbers to over 100 different product versions over the years. Just noting as different versions may offer different things.

Oh, I should also mention that, whoever I speak to at Std Life they do not seem to recognise the term UFPLS.

That is because it is a form of drawdown and is an option that was aimed at legacy schemes who could not offer drawdown but may be able to update their software to allow UFPLS (which could draw on a lot of the old triviality software they had in place). If a provider offers it, their staff will be aware of it. If the provider does not offer it, then their staff will not be aware of it. If they offer drawdown, then they do not need to offer UFPLS.

Is Std Life's "Active Money" pension essentially just their in-house brand name for U.F.P.L.S.?

Active money is the marketing name for one of their current versions of pension they offer.
UFPLS is an actual transaction type and not a product type.

If you are going to need to transfer the pension, then you should consider whole of market options. Not just limit yourself to one provider.

AnotherJoe

ArmyDilllo wrote: »

I would have rather stuck with them as I like the way they've invested it on my behalf to date,

No reason you can't switch to another provider and buy the same or very similar funds in that if you want to stay invested whilst you drawdown

xylophone

https://www.adviserzone.com/adviser/public/adviserzone/individual/products/retirementincome/drawdown/overview/tailoreddrawdown

Worked example of UFPLS in Standard Life's Adviserzone.

They do not appear to produce a "customer focused" explanation as do, eg
Prudential

https://www.pru.co.uk/pdf/RACB257701.pdf

Hargreaves Lansdown

http://www.hl.co.uk/pensions/ufpls

jamesd

You're wrong in believing that you need UFPLS to do what you want. No problem at all to do it with flexible drawdown and that gets you more flexibility to do things like taking extra tax free lump sum out to fund paying into an ISA without also having to take an additional taxable 75%.

Flexible drawdown normally works like this:

1. You start with your whole pot in account A that holds only uncrystallised money from which a tax free lump sum can be taken.
2. At any time you can put part of the pot into flexible drawdown. You will be paid the 25% tax free lump sum on that part and the 75% will be placed in a new flexible drawdown account B. The rest remains in A.
3. At any time you can take any amount of the taxable money from account B.

Places that operate flexible drawdown would normally offer UFPLS as well, though it's not necessary because flexible drawdown can do everything that UFPLS can do. UFPLS is a sort of cut down option that's easy for older pension schemes to add on.

Describing something as a "full UFPLS" is odd. There's exactly one UFPLS thing and it's the cut down option, not the full one, which is flexible drawdown.

Monthly income of the sort you have in mind can be done with monthly UFPLS requests but it's really more the sort of thing that flexible drawdown is geared for. You'd normally put some sensible amount into drawdown to start, tell the pension place to make monthly payments from the drawdown pot and top it up from time to time by putting more into drawdown.

There's no inheritance tax difference between the money in account A and the money in account B. It's all in a pension and inheritable outside your estate tax free if you die before age 75 or taxed at the tax rate of the recipient when they take money out after that. There used to be differences under the scheme that was in place before flexible drawdown was introduced and someone might be remembering those out of date rules.

kidmugsy

I've been told that UFPLS is pronounced uffle-puff. Is that true?

sandsy

I know it as uff-plus.

ArmyDilllo

Thanks everyone for your input.

Jamesd; very useful, thank you.
I had a meet recently with Pensionwise (just because it was free, I thought I'd just make sure I'd made no glaring mistakes).
They did not explain this or even hint that I might have misunderstood.
Very grateful for your explanation which makes way more sense and solves a whole raft of questions I would have had to follow up too.
Thanks again!

jamesd wrote: »

You're wrong in believing that you need UFPLS to do what you want. No problem at all to do it with flexible drawdown and that gets you more flexibility to do things like taking extra tax free lump sum out to fund paying into an ISA without also having to take an additional taxable 75%.

@ Kid Mugsy 11:03

I believe "uffle-puff" was Gringotts' in-house UFPLS scheme.