Checking drawdown terminology and how it works

AnotherJoe

I may be taking some money out of a SIPP. I only wish to access the tax free lump sum.
But I don't need the full 25%.
So, given all the phrases being bandied about for drawdown, is there an acronym that covers this ?or what's it called ?
And, suppose for sake of argument I take out 10%. Can I then take out 15% from the remaking sum at some later point , that whole sum of course having risen or dropped in the intervening time? I'll be calling my supplier Standard Life tomorrow but wanted to get my ducks in a row. Can't find the specifics on their website.

ColdIron

Phased drawdown? Not an acronym, sorry. For example you have a pot of £100,000, you crystallise/move £40,000 into drawdown and take 25% PCLS (your 10% or £10,000). So you have £30,000 in drawdown but don't have to take an income from it leaving £60,000 uncrystallised and available for further drawdown and associated PCLS

SonOf

So, given all the phrases being bandied about for drawdown, is there an acronym that covers this ?or what's it called ?

Phased flexi-access drawdown.

And, suppose for sake of argument I take out 10%. Can I then take out 15% from the remaking sum at some later point , that whole sum of course having risen or dropped in the intervening time?

You crystallise enough of your fund to hit your target figure lump sum. You then end up with a crystallised fund with the 75% and an uncrystallised fund with the rest. You can then take 25% of the uncrystillised fund whenever you choose to.

Albermarle

Also Standard Life do offer this , as long as you are in their latest pension offering. If you are in an older one you will have to transfer to a new one first.
If so make sure you do not lose any current special discounts you might have .

AnotherJoe

Thanks guys. Ok so it will be similar to my HL SIPP with two different "pots" except since I took the whole 25% One pot contained nothing.
My SL scheme is fairly new but it was a company pension so it depends what rules are associated with that.

Albermarle

Also I understand it is possible to say take a portion of tax free cash with the corresponding amount going into drawdown. Then to take some taxable money from the crystallised part as well .
This can suit certain people depending on their tax situation .
In my mind it is kind of similar to UFPLS but with more flexibility.
Of course it will trigger the MPPA but not everybody is bothered about that

EdSwippet

AnotherJoe wrote: »

Thanks guys. Ok so it will be similar to my HL SIPP with two different "pots" ...

It might be. However, some pension providers leave everything in one "pot" and just record what proportion of that is crystallised and what not.

That's not going to be any problem for you if you crystallise the entire pension (you'll effectively have no 'pot containing nothing'), but worth bearing in mind if you will crystallise less than the entire pension, since if SL does things this way you wouldn't be able to hold distinct investments in the crystallised and not-yet-crystallised portions.

squirrelpie

AnotherJoe wrote: »

Thanks guys. Ok so it will be similar to my HL SIPP with two different "pots" except since I took the whole 25% One pot contained nothing.
My SL scheme is fairly new but it was a company pension so it depends what rules are associated with that.

I believe that if you crystallize say £40,000 (i.e. move it into drawdown) it is all moved to a different pot with HL then you can immediately withdraw up to £10,000 tax free. The remaining £30,000 can be withdrawn as taxable payments divided up as you like over time and the balance can stay invested until needed. But if you crystallize £40,000 and only withdraw £5,000 tax free then that's your lot. All of the remaining £35,000 is taxable when withdrawn (so don't do that! Only crystallize as much as you need to take 25% tax free).


UFPLS is just a sort of pre-packaged drawdown where you crystallize some amount of money and withdraw the whole lot at once, taxed on the same basis as above.


I'm currently involved in discussions with HL about the amount of form-filling they require to actually draw a regular income using these facilities, especially UFPLS.

shinytop

squirrelpie wrote: »

I believe that if you crystallize say £40,000 (i.e. move it into drawdown) it is all moved to a different pot with HL then you can immediately withdraw up to £10,000 tax free. The remaining £30,000 can be withdrawn as taxable payments divided up as you like over time and the balance can stay invested until needed. But if you crystallize £40,000 and only withdraw £5,000 tax free then that's your lot. All of the remaining £35,000 is taxable when withdrawn (so don't do that! Only crystallize as much as you need to take 25% tax free).

I don't think it's a case of "you can immediately withdraw up to £10k cash free". With HL, when you crystallise your chosen amount, the whole applicable tax free amount is transferred, in cash, to your nominated bank account. At least that's what happened with me. You can then do what you want with the cash; I immediately re-invested into my ISA.

AnotherJoe

shinytop wrote: »

I don't think it's a case of "you can immediately withdraw up to £10k cash free". With HL, when you crystallise your chosen amount, the whole applicable tax free amount is transferred, in cash, to your nominated bank account. At least that's what happened with me. You can then do what you want with the cash; I immediately re-invested into my ISA.

Same here the tax free money is sent to your nominated bank account (or to a HL fund and share account as cash ). You don't get to choose how much tax free cash to take from a crystallised amount after the event. May be different with other suppliers.

Sea_Shell

On this subject...is it possible to then transfer a crystallised pot to another provider? Eg if they changed their fees or another provider became cheaper? Or are you stuck with them throughout the whole drawdown period?