How much DD and when & 25% Tax Fee

squirrelpie

dunstonh said:

Can you please provide some actual example names?

I would have a harder job telling you the names of those that do not.  I cannot think of a single one at the moment who does not offer phased drawdown.  I am sure HL will do it.   It is effectively an automated regular UFPLS.

I already know for sure that HL do not do it (i.e. drawdown where each payment is a mix of tax-free and taxable cash), both from their site and from having asked them.

So I read your first sentence and thought, fair enough - I need to do my own donkey work - I'll try any other site. So I went to AJBell's site (https://www.youinvest.co.uk/pensions-and-retirement/accessing-your-pension/drawdown). It seems clear from their site and the drawdown guide you can download from that page, that they don't offer it either. They only offer a 25% payment at the start of drawdown and then all regular payments are taxable.

So 100% of the providers I've looked at do not offer it. Could you please, pretty please, name at least one that does offer the facilty you state.

The same question to zagfles.

zagfles

squirrelpie said:

dunstonh said:

Can you please provide some actual example names?

I would have a harder job telling you the names of those that do not.  I cannot think of a single one at the moment who does not offer phased drawdown.  I am sure HL will do it.   It is effectively an automated regular UFPLS.

I already know for sure that HL do not do it (i.e. drawdown where each payment is a mix of tax-free and taxable cash), both from their site and from having asked them.

So I read your first sentence and thought, fair enough - I need to do my own donkey work - I'll try any other site. So I went to AJBell's site (https://www.youinvest.co.uk/pensions-and-retirement/accessing-your-pension/drawdown). It seems clear from their site and the drawdown guide you can download from that page, that they don't offer it either. They only offer a 25% payment at the start of drawdown and then all regular payments are taxable.

So 100% of the providers I've looked at do not offer it. Could you please, pretty please, name at least one that does offer the facilty you state.

The same question to zagfles.

I've just mentioned 2 in my previous post!

If you're asking which retail SIPP providers do it without insisting you pay an intermediary, then I don't know, I've not researched it in any depth other than a quick google, as I don't really have any interest in this particular facility.

Albermarle

squirrelpie said:

dunstonh said:

Can you please provide some actual example names?

I would have a harder job telling you the names of those that do not.  I cannot think of a single one at the moment who does not offer phased drawdown.  I am sure HL will do it.   It is effectively an automated regular UFPLS.

I already know for sure that HL do not do it (i.e. drawdown where each payment is a mix of tax-free and taxable cash), both from their site and from having asked them.

So I read your first sentence and thought, fair enough - I need to do my own donkey work - I'll try any other site. So I went to AJBell's site (https://www.youinvest.co.uk/pensions-and-retirement/accessing-your-pension/drawdown). It seems clear from their site and the drawdown guide you can download from that page, that they don't offer it either. They only offer a 25% payment at the start of drawdown and then all regular payments are taxable.

So 100% of the providers I've looked at do not offer it. Could you please, pretty please, name at least one that does offer the facilty you state.

The same question to zagfles.

I also mentioned Aviva in my post but possibly only the advised side.
I think it is pretty clear that it is mainly/only the pensions that advisors use that offer it . That would explain why Dunston thinks everybody offers, it and you can not find anybody offering it 
If you consider most people struggle even to understand drawdown at all , I imagine the demand to do this from retail investors is very low . So the retail providers do not offer it as an option as there is so little demand /hardly anyone ever asks.

dunstonh

So 100% of the providers I've looked at do not offer it. Could you please, pretty please, name at least one that does offer the facilty you state.

Without opening up the software to see, you have Aviva, Royal London, Standard Life (on all their platforms), Transact offering it. 

If you consider most people struggle even to understand drawdown at all , I imagine the demand to do this from retail investors is very low . So the retail providers do not offer it as an option as there is so little demand /hardly anyone ever asks.

Of all the variations, it is the most common method that we use.     However, most of the people we have done it for didnt realise it existed.

jamesd

Nick9967 said:

I am likely to need to vary the amount i draw on an annual basis, i.e. £20k year 1-3 then £24k year 4-7  £18k year 8-12 etc etc ... I'm going to be working part time for the first 5 years or so of retirement so want to get straight in my head what is likely to be the best, most efficient scenario. I

The best and most efficient scenario is the one which lets you continue to make pension contributions of all of your part time income. This is because you make a tax gain of at least 6.25% on the money (basic rate in and out, 25% tax free delivers the 6.25%).

To do that you must avoid triggering the Money Purchase Annual Allowance which limits you to no more than £4,000 a year of gross pension contributions. Unless your income will be less than that. Flexible Access means only these two things:

1. A UFPLS withdrawal of a lump sum that is 25% tax free and 75% taxable.
2. Withdrawing even a penny of the taxable money from a Flexi-Access drawdown account, which is where the 75% taxable ends up after you take the tax free PCLS.

Flexible Access does not include:

3. Taking the Pension Commencement Lump Sum (PCLS) of up to 25% tax free from all or part of a pot, the remaining 75% going into a Flexi-Access drawdown account that you only withdraw from when you're willing to trigger the MPAA.
4. Using the Small Pot Rule up to three times in your life to take all of a pot worth up to £10,000 as a lump sum that is 25% tax free and 75% taxable (but isn't the UFPLS that you need to avoid). You're allowed to move money around to get a good size and if you tell HL you want to take it this way they will make it easy by doing the splitting behind the scenes.

What this means is that the extensive discussion of split monthly payments may be moot because it would trigger the MPAA.

jamesd

Here's what you can do without triggering the MPAA or exceeding limits on recycling of PCLS money:

1. take up to £7,500 of PCLS per rolling 12 month  period (not tax or calendar year) and place the 75% remainder (£22,500) into flexi-access drawdown taking nothing from this to avoid triggering the MPAA restriction to 4k of contributions per year.

2. take the whole of a pot worth up to 10k as a small pot, up to three times in your life. These don't count for the recycling rule even though 25% is tax free.

So a possible approach might be:

A. for three years
a. take a 10k small pot payment leaving 30k
b. take a 25% tax free PCLS of £7,500 from the 30k and place the remaining 22.5k into flexi-access drawdown

B. that used all 3 permitted small pots so now continue with just A.b.

These are pretty easy to apply because 7500 and 10000 are specifically mentioned in the rules.

But there's another recycling rule that can allow more than 7500. This one says that you're allowed to increase your pension contributions by up to 30% of the lump sum in total over the two tax years before you take, it, the tax year you take it and the following two tax years. To work out what was expected requires looking back more than two years to determine the pattern of contributions.