Income drawdown benefit review

brianposter

Thrugelmir said:

Companies have to cover their operating costs and investment in technology. 

The general idea is that businesses cover their costs by setting their obvious charges appropriately, not by charging for entirely useless extra "services" - although I assume that this particular useless service is actually mandated by the regulator.

dunstonh

To me the charge looks like a typical financial industry scheme for cheating money out of peoples savings.

Capped drawdown was only used by a relatively small number of consumers and required evidence reporting for HMRC purposes.   Those things cost money.    It didn't have the economies of scale to share the costs across everyone.  And it can be argued that getting other people to pay your costs would be more unfair.

Just because you do not understand something does not mean you are being cheated out of money.

The general idea is that businesses cover their costs by setting their obvious charges appropriately, not by charging for entirely useless extra "services" 

Its not a useless extra service.   GAD reviews are necessary.

Is simply switching the fund to flexi-access drawdown likely to have any disadvantages if I am not proposing to make any further contributions ?

As long as you do not intend to pay any more then no.

brianposter

Thanks. Surely the regulations could have been drawn up so that a pension fund which was not in drawdown needed no review.

garmeg

brianposter said:

Thanks. Surely the regulations could have been drawn up so that a pension fund which was not in drawdown needed no review.

You said you were in capped drawdown though?

dunstonh

brianposter said:

Thanks. Surely the regulations could have been drawn up so that a pension fund which was not in drawdown needed no review.

The regulations you are under are decades old.  You are in drawdown.  You have just selected a zero income.   Do not mistake them for the 2015 version which has different requirements.        The minute you crystallised the pension (assume it was to draw the 25%) then you entered drawdown.

jamesd

brianposter said:

Thanks. Surely the regulations could have been drawn up so that a pension fund which was not in drawdown needed no review.

Yes but they were part of changes which greatly increased pension flexibility, including taking the tax free lump sum and no ongoing income. £75 very three years isn't horrible.

Under Capped Drawdown you can take out up to the GAD limited taxable income without triggering the £4,000 a year of money purchase pension contributions cap of the Money Purchase Annual Allowance. Switch the pot to Flexi-access Drawdown and taking even a penny triggers the MPAA. No GAD calculation and associated charge needed for Flexi-access Drawdown.

Since you won't be making more pension contributions the MPAA doesn't affect you.

If you're still working it's likely to be to your benefit to make pension contributions because they have the potential to cut your basic rate tax bill by 25%. Taking the Capped Drawdown income can help to facilitate higher contributions.