Flexi Drawdown Queries

Sue58

Linton wrote: »

That is very good, much less notice than Bestinvest. It only gives gives them 5 days to input the data, run the PAYE and send out the money. I would be interested to know who the provider is, and when they run their payroll.

The provider is Fidelity and their pension customer service assistant gave me this information over the phone today but she has also scheduled a call from with pension adviser tomorrow morning at 11.30am. I was told he would talk me through the process when he calls me.

OldMusicGuy

Sue58 wrote: »

So in theory, I could use UFPLS to claim my personal allowance for this year £11,850 plus the 25% tax free sum of £3950 making a total drawdown of £15,800? Then at a later date if I need to crystallise the rest of my pot I could then take the remaining 25% TFLS?

Not necessarily. You can keep making UFPLS withdrawals.

Sue58 wrote: »

I know you mentioned that you are only using UFPLS from 60 to 66 until SP age, but will you still be able to access the rest of your 25% TFLS after this? Sorry for all the questions but I'm new to drawdown and the options.

As I understand it, 25% of the remaining fund after any UFPLS withdrawals is tax free. If you do UFPLS withdrawals you are using part of that total 25% tax free allowance. So when you crystallise the remainder, the small chunks of the 25% allowance you take with each UFPLS withdrawal are automatically taken into account.

Dazed_and_confused

The money will mainly be used to re-invest in the same funds in my husbands and my ISA accounts.

If you have applied for Marriage Allowance you need to remember that taking £11,850 in taxable pension in the current tax year will mean you will be liable for tax on anything above £10,660 (your reduced Personal Allowance in 2018:19).

Sue58

MPN wrote: »

Would the OP not be better off taking the full 25% TFLS from her £150K pot? If she takes the full £37,500 she can invest this into her and her spouse's S&S ISA's? I suppose she could also then take her personal allowance for this year as well if the idea is to take as much out of her total pot before state pension kicks in?

Although as I mentioned we don’t need the money at the moment, but yes, the idea is to withdraw as much from my pension as possible until state pension age at 66. We will then use this money to add to our tax free ISA accounts.

I’m just struggling to know whether it would be best to take the full 25% TFLS and then my personal allowance each year or whether it is best to go down the UFPLS route (bearing in mind the criteria is to take the maximum money out of my pension pot tax free)?

MPN

Sue58 wrote: »

Although as I mentioned we don’t need the money at the moment, but yes, the idea is to withdraw as much from my pension as possible until state pension age at 66. We will then use this money to add to our tax free ISA accounts.

I’m just struggling to know whether it would be best to take the full 25% TFLS and then my personal allowance each year or whether it is best to go down the UFPLS route (bearing in mind the criteria is to take the maximum money out of my pension pot tax free)?

Its difficult to say which route would clear more tax free money from your pension pot until you reach SP age. Indeed, there might not be much to choose between the two? However, maybe other more experienced and knowledgeable posters in pension drawdown could comment further?

okydoky

Worth having a look at the platform charges?

With A J Bell for example, one-off payments like UFPLS withdrawals are charged at £25 plus VAT, but going into Regular Income Drawdown costs £100 pa plus VAT, plus another £75 plus VAT for annual/triennial reviews.

EdGasketTheSecond

I get confused with the terms. Is taking ad-hoc UFPLS payments the same as being 'in drawdown'. If not what does a pension in drawdown actually mean?

dunstonh

EdGasketTheSecond wrote: »

I get confused with the terms. Is taking ad-hoc UFPLS payments the same as being 'in drawdown'. If not what does a pension in drawdown actually mean?

Drawdown is a generic term covering a range of methods.

"pension in drawdown" is not actually a real meaning. It is just something someone may say if they are using an income drawdown method where crystallised benefits remain in the plan.

EdGasketTheSecond

So does just using UFPLS mean the pension is not in drawdown because nothing has been crystalised? ( I think the pension only becomes crystalised when you take some or all of the 25% tax-free lump sum without the corresponding taxable amount - is that correct?)

zagfles

EdGasketTheSecond wrote: »

So does just using UFPLS mean the pension is not in drawdown because nothing has been crystalised?

Yes. You take the UFPLS from an uncrystallised pot, and the remainder of the pot remains uncrystallised.

( I think the pension only becomes crystalised when you take some or all of the 25% tax-free lump sum without the corresponding taxable amount - is that correct?)

Sort of.

The pension becomes crystallised when you choose to crystallise it. At that point you can take 25% tax free.

People seem to think the taking of the 25% TFLS causes the crystallisation, but that's the wrong way round.

You choose to crystallise your pot, or part of your pot. At that point you have a once only opportunity to take up to 25% of your pot (or the part you crystallised) as a TFLS