Flexi Drawdown Queries

StellaN

Sue58 wrote: »

Now, I just have to make a final decision between taking the full TFLS or UFPLS.

You mentioned in your OP that you don't need the money at the moment, so if it was my choice, I would go for UFPLS. If you take the full TFLS it is a much larger amount and you will be out of the market for a week or two until you can re-invest in the new tax year and who knows if you will cash in for drawdown when the market is up/down and what the price will be when you re-invest. Therefore, a more gradual UFPLS over the years seems to me the sensible approach but clearly it depends on your individual circumstances.

Sue58

StellaN wrote: »

You mentioned in your OP that you don't need the money at the moment, so if it was my choice, I would go for UFPLS. If you take the full TFLS it is a much larger amount and you will be out of the market for a week or two until you can re-invest in the new tax year and who knows if you will cash in for drawdown when the market is up/down and what the price will be when you re-invest. Therefore, a more gradual UFPLS over the years seems to me the sensible approach but clearly it depends on your individual circumstances.

Thanks for your input StellaN, I think I am going to go down the UFPLS route.

pensionpawn

I'm soon going to consolidate some of my smaller legacy pension pots so that I have two six figure pots and a growing 5 figure pot. My question is when I decide to start accessing my pension could I withdraw UFPLS from one pot and then at a later stage crystallise, take 25% and drawdown from the second / third pot(s)? Could I do this in the reverse order if I wanted to? Thanks.

jimlad68

As others have said - Check charges:

Because of this, and tax implications of taking too much out in one tax year "when I need it"; hence paying higher rate tax my plan is:

- take out from SIPP as much as I can each year (at lower rate tax) and put into a SIPP or simple Fund/share account, e.g. iWeb ISA/Share charges (not SIPP) are much lower than Fidelity, Hargreaves Lansdown etc.

In your case re lump sum, if you take it all out and put the residue into a lower charging ISA, you may save a lot in charges.

In the meantime I moved my SIPP from Hargreaves Lansdown to Fidelity, as for "my circumstances" they were cheaper, however, the website (which I suspect had just changed while I was moving), is, shall I say "a pain" and unhelpful. I am now waiting to see what the Vanguard SIPP charges will be like (It's a long time coming).

Sue58

jimlad68 wrote: »

As others have said - Check charges:

In your case re lump sum, if you take it all out and put the residue into a lower charging ISA, you may save a lot in charges.

Fidelity charges are capped at £45 per annum if you only invest in IT's or ETF's and there is no charges for drawdown or any exit fees if you wish to transfer at a later date.

MK62

If the aim is to take as much as possible out of the SIPP, tax free, before you reach 66 (SP age) then crystallising now and taking the full 25% TFLS, followed by 6 annual drawdown withdrawals equal to the PA, would get more out than using UFPLS (c£120k vs 110k, if you ignore inflation for this comparison).

However, there's really no need, as you can defer your state pension until your SIPP is depleted, and get your SP boosted by 1% for each 9 weeks you defer (=5.8% pa)

In the end, if you do it right, it should make no difference whether you use UFPLS or crystalise/drawdown - and if you restrict yourself to just the equivalent of the PA in taxable withdrawals each year, you should be able to get everything out of the SIPP tax free.

However, in your case, using UFPLS would rely on the govt not moving the goalposts over the next 6 years - so I might be inclined to play safe, crystallise now and take the full 25% TFLS, which, at £37500 fits just nicely into 2 people's ISA allowances.

StellaN

MK62 wrote: »

However, in your case, using UFPLS would rely on the govt not moving the goalposts over the next 6 years - so I might be inclined to play safe, crystallise now and take the full 25% TFLS, which, at £37500 fits just nicely into 2 people's ISA allowances.

Surely it would be political suicide for any government to move the goalposts on the pension TFLS.

dunstonh

StellaN wrote: »

Surely it would be political suicide for any government to move the goalposts on the pension TFLS.

It wouldnt raise much tax. It would harm the economy and there are far easier targets (such as salary sacrifice) that are more stealth like in tax and would raise a heck of a lot more.

Plus, it doesn't really fit with government policy of either party for the last 30 years which has seen the tax free cash extended rather than restricted.

barnstar2077

dunstonh wrote: »

It wouldnt raise much tax. It would harm the economy and there are far easier targets (such as salary sacrifice) that are more stealth like in tax and would raise a heck of a lot more.

Plus, it doesn't really fit with government policy of either party for the last 30 years which has seen the tax free cash extended rather than restricted.

They maybe leaving Salary Sacrifice alone because it encourages people to save into pensions, which they desperately want people to do to avoid having to prop them up financially in later life.

Triumph13

Personally I would opt for the low stress route in the OP's position. The number one priority is to use this year's PA before the end of the tax year. That is simply and easily done by taking an UFPLS.
OP then has a whole year to compare platform charges, should she so wish, and work out whether it's cheaper to a) keep taking UFPLS each year; b) take the full TFLS on the balance (moving it to an ISA) and put a drawdown arrangement in place to take PA in subsequent years; or c)transfer to another provider first then take routes a or b.
There is no point suffering the stress of trying to get all that lot decided and arranged before the end of this tax year.
It's also not worth being stressed about the taxman issuing you an emergency tax code and snaffling some of your UFPLS. 5 mins on the phone or online and the nice people at HMRC will send you a refund cheque within a couple of weeks.