UFPLS vs flexi-access drawdown

Albermarle

Also, how are you charged? II seem to end up charging more mor arranging a monthly flexi-access drawdown - even if you don't withdraw in certain months (£10 per month), whereas for UFPLS they charge £50 per withdrawal - so an annual UFPLS would cost less than monthly flexi (the changes for moving into drawdown appear to be the same, if I've understood correctly).

Each platform is different . A couple ( HL & Fidelity) do not charge for any withdrawals at all , whether it is UFPLS or flexi drawdown . ( although their regular charges are higher )

squirrelpie

Moe_The_Bartender wrote: »

Here’s a good read.

https://www.moneymarketing.co.uk/ufpls-vs-drawdown/

Well, except it's not quite right. It says: "you can draw some or all the income without taking the PCLS". The only way to do that is to not take the PCLS at all. i.e. take the whole thing as taxable payments

It also says: "That is where the individual wants to take tax-free cash and income together at the same time. The most common situation is likely to arise where the client wants to draw the whole of their pension pot at once."

I would argue that the most common case is when the client simply wants to take a regular income every month, tax-efficiently but with no lump sums. A regular UFPLS payment would meet that requirement elegantly but apparently is only available from very few providers at the moment.

green_man

What I have found by looking through some of the charging profiles for commonly available DIY platforms is that many do not yet seem to be completely geared for phased/flexible drawdown. There are often separate charges for allocating every tranche of money to drawdown and for each individual UFPLS. Some do seem to provide a cost effective approach but these can typically be the platforms with higher base charges, e.g HL don’t have any drawdown charges but do charge 0.4% admin charge per year.

In my case the HL charges would be around £1600 per year. I can stay with Halifax and pay £180 per year plus £90 per UFPLS, so my plan is one UFPLS per year to take advantage of my income tax allowance etc.

The article above completely fails to consider the platform charge implications of using phased drawdown. In addition if you don’t actually want to take TFLS up front I see little advantage of phased/flexi.

gm0

The last contribution from green_man on scheme support and costs in the round is important

In general and especially for older schemes - what is "allowed" is not always supported. What is supported is not always incentivised on a given platform charging structure. Older occupational schemes are often administered (and outsourced) on to put it politely - legacy IT and record keeping. Some don't support drawdown at all or are restricted in the methods. Offer what they offer + a "transfer out to SIPP of your choice" option. As commented not all SIPPs are equal in this regard or in managing "pots" crystallised, uncrystallised etc.

Knowing what method(s) you can live with and what your preferred one is are helpful to go SIPP platform shopping or make the switch from occupational.

You shouldn't be switching from occupational to SIPP until you understand what new investment choices, access methods or improved costs are driving the decision to do it. You are losing something - pension protection. And it isn't easily reversible.

In "general" modern SIPPs are much better (mainstream provider assumed). Investment range principally. Sometimes costs - but not always. For some people keeping the higher protection, lower/comparable fund costs and an acceptable investment range is a better strategy provided you can get the money out.

So for that decision you need to know the existing costs (which can be tricky or not scheme by scheme) and more importantly what you want your portfolio to look like and whether this is supportable. I think this will generally be doable for whole of market global passive indexer strategies. But likely not for active as "old schemes" do tend to have mediocre/costly funds in them and a limited range. Poison and such small portions. If you believe in whole of market cheaply though then you should do the holistic cost compare before jumping (scheme charges vs platform fees and fund costs for the required asset classes and any drawdown costs.

I also suggest as this conversation is fund value agnostic - that you do a sanity check on "do i have an LTA problem at 55 or by 75 (20 years growth + inflation). FAD (and ISA recycling) is more attractive than UFPLS once this becomes an issue provided you understand your spending, gifting, care and IHT plans. Squeeze the tax balloon here and it bulges over there. Pension outside estate. ISA inside.

It has taken me a few months intermittent study to get up to speed enough to think this through for my own planning as a consumer. I do remember a !!!!!! ? moment when I started to look at FAD and UFPLS and LTA/BCE so you have my sympathy.