Has anyone any experience of the drawdown process with Vanguard?

dave_hendy

Albermarle said:

Also the 25% tax free of the drawdown had to be taken immediately. I'd have preferred it month

ly with my payment.

The info on their website contradicts this .

With flexible income (drawdown) you start by taking up to 25% of your pension as a tax-free cash lump sum up front. The taxable part of your pension is then moved into a 'drawdown account'.

You can take your tax-free cash in one go. Or take it bit by bit and move money into your drawdown account gradually.

Do Vanguard provide the option of UFPLS as well as flexible drawdown?

Again from their website

Individual lump sums

You can take smaller lump sums over time or cash in your whole pot in one go. If you take a large lump sum, you could end up with a big tax bill.

Get a mix of tax-free cash and taxable income at the same time.

Each time you take money out of your pension 25% will be tax-free and the other 75% will be taxed as income

Thanks, to me though, neither are particularly well written. I only want £12k per year to start with and it doesn’t need to be tax free as it will be below my tax allowance. I definitely don’t want a lump sum and want to leave as much as possible untouched for as long as possible.

zagfles

What I think the PP meant was you can't set up "drawdown" to take what is effectively a monthly UFPLS, as you can with some providers (typically workplace providers). You could theoretically take a UFPLS every month but you'd have to apply each time AIUI which would likely be ridiculously bureaucratic. But you can phase drawdown, ie put part of the pension into drawdown and take 25% of just that part, leaving the 75% of that part crystallised and available for taxed drawdown, and the rest of the pot uncrystallised.

Trouble is the new rules are too flexible so providers generally don't offer all possible options. They'll all likely offer the full crystallisation option with the entire 25% TFLS up front, and one off UFPLSs, but for phasing some will offer the "monthly UFPLS" option and others like most SIPP providers will offer the partial crystallisation option where you take 25% of the part you want to crystallise up front each time.

Albermarle

zagfles said:

What I think the PP meant was you can't set up "drawdown" to take what is effectively a monthly UFPLS, as you can with some providers (typically workplace providers). You could theoretically take a UFPLS every month but you'd have to apply each time AIUI which would likely be ridiculously bureaucratic. But you can phase drawdown, ie put part of the pension into drawdown and take 25% of just that part, leaving the 75% of that part crystallised and available for taxed drawdown, and the rest of the pot uncrystallised.

Trouble is the new rules are too flexible so providers generally don't offer all possible options. They'll all likely offer the full crystallisation option with the entire 25% TFLS up front, and one off UFPLSs, but for phasing some will offer the "monthly UFPLS" option and others like most SIPP providers will offer the partial crystallisation option where you take 25% of the part you want to crystallise up front each time.

To get around the 'monthly UFPLS issue' ,then you can take one UFPLS each tax year and use it over the year . Maybe not ideal but a solution sometimes  mentioned on this forum .

Malchester

Yes one option is to take an annual withdrawal. I take monthly withdrawals under UFPLS but have to request it each month. It's not with Vanguard but literally takes just 1 minute to do online and then 6 or 7 days later it is in my account.

dunstonh

k6chris said:

john-306 said:

I found Vanguard's drawdown process quite simple.

Also the 25% tax free of the drawdown had to be taken immediately. I'd have preferred it monthly with my payment.

Really?!  That is a huge limitation.

Indeed it is.  I find most of the drawdown clients I see end up on the phased monthly method as the best option.      
although many DIY investors on this site could manage doing ad-hoc ones, not many average consumers would.

FNZ, the platform software provider, supports phased drawdown/UFPLS on its SIPP.  However, I wonder if this is because Vanguard didn't want a SIPP and had to have its own product built and they haven't built that functionality yet.   The vast majority of modern pensions support all methods.  

zagfles

Albermarle said:

zagfles said:

What I think the PP meant was you can't set up "drawdown" to take what is effectively a monthly UFPLS, as you can with some providers (typically workplace providers). You could theoretically take a UFPLS every month but you'd have to apply each time AIUI which would likely be ridiculously bureaucratic. But you can phase drawdown, ie put part of the pension into drawdown and take 25% of just that part, leaving the 75% of that part crystallised and available for taxed drawdown, and the rest of the pot uncrystallised.

Trouble is the new rules are too flexible so providers generally don't offer all possible options. They'll all likely offer the full crystallisation option with the entire 25% TFLS up front, and one off UFPLSs, but for phasing some will offer the "monthly UFPLS" option and others like most SIPP providers will offer the partial crystallisation option where you take 25% of the part you want to crystallise up front each time.

To get around the 'monthly UFPLS issue' ,then you can take one UFPLS each tax year and use it over the year . Maybe not ideal but a solution sometimes  mentioned on this forum .

You could do that but may end overpaying tax and having to claim it back. I think an easier solution would be to crystallise a year's worth of desired income, take the 25% PCLS of that year's income up front and then drawdown monthly taxable income from the crystallised 75% over the year. Or maybe do 2 or 3 year's income at once, or maybe enough to fill an ISA with the PCLS. Loads of ways to skin a cat, the difference in the end very marginal in most cases so do whatever you find easiest.

zagfles

Malchester said:

Yes one option is to take an annual withdrawal. I take monthly withdrawals under UFPLS but have to request it each month. It's not with Vanguard but literally takes just 1 minute to do online and then 6 or 7 days later it is in my account.

Interesting, which provider is that? I thought requesting UFPLSs ad hoc usually required quite a cumbersome process each time?

Malchester

zagfles said:

Malchester said:

Yes one option is to take an annual withdrawal. I take monthly withdrawals under UFPLS but have to request it each month. It's not with Vanguard but literally takes just 1 minute to do online and then 6 or 7 days later it is in my account.

Interesting, which provider is that? I thought requesting UFPLSs ad hoc usually required quite a cumbersome process each time?

PensionBee. I put my request in on 6th of each month by answering about 8 yes/no questions online - such as 'do I know there sre other pension providers', 'have I spoken to pension wise', do I expect my pension to last the whole of my life', 'am I taking the pension to invest elsewhere', 'do I know about pension scams', and more. Once answered, input tax free and taxable amount and all done. Confirmation email arrives immediately and money received in 6 or 7 days, usually by 13th of month.

john-306

Albermarle said:

Also the 25% tax free of the drawdown had to be taken immediately. I'd have preferred it month

ly with my payment.

The info on their website contradicts this .

With flexible income (drawdown) you start by taking up to 25% of your pension as a tax-free cash lump sum up front. The taxable part of your pension is then moved into a 'drawdown account'.

You can take your tax-free cash in one go. Or take it bit by bit and move money into your drawdown account gradually.

Do Vanguard provide the option of UFPLS as well as flexible drawdown?

Again from their website

Individual lump sums

You can take smaller lump sums over time or cash in your whole pot in one go. If you take a large lump sum, you could end up with a big tax bill.

Get a mix of tax-free cash and taxable income at the same time.

Each time you take money out of your pension 25% will be tax-free and the other 75% will be taxed as income

Thanks.
I hadn't seen that on Vanguard's site.
I'll mention it when I contact them next month to set up next tax years drawdown.

gm0

This is all driven by code of practice compliance and how cautious providers feel they need to be.  FCA are still fiddling with this part of the code. There was another "how hard should we be forcing Pensionwise takeup consultation" not long ago so it is still a regulatory hot topic.  They are not minded to make it simpler and slicker with instant opt out at first contact.  Quite the reverse.  And from where they sit with the responsibilities they have - they are not wrong either.  A lot of people turn up here (and they are not Joe/Joanna Average in turning up - very certain of what they want to do - and then get mugged by reality.

In house risk and compliance teams which will likely be established and more powerful and cautious at a Fidelity or a Vanguard and a bit more adventurous at an entrant like a PensionBee or a Scalable say and more digital savvy. 

The older the company the more archaic it can get.  I just went through this exact process with L&G and we corresponded electronically - web questionnaire forms and secure email - but the PDFs I edited and returned for receipt of quotation and LTA looked like ancient forms that had been given a second chance at life. 
They didn't want to talk to me though - just accepted that I had talked to PensionWise and answered their questions, signed off etc.

Yet despite all my reading here I still got the one about income lasting your whole life wrong.  I thought my drawdown plan definitely needed to last my whole life and answered accordingly.  But they were actually talking about annuities in code.

Depends on the provider but my take is you won't get far refusing to engage with it. If they are even vaguely awake the process will just stop on you until you do what they want or you issue a transfer out "pull" from somewhere else in frustration.

The code of practice exists for good reasons so while it is a royal pain in the backside to have to do it contemporary to each crystallisation or taking of benefits rather than just once then it only becomes truly problematic when the wait time to book a session becomes a backlog issue which delays you to have a box tick call that you don't want.  They are logging that contact as a regulatory defense.

The FCA consultation was thinking over "cooldowns" baked into the process though this received a fairly loud raspberry in the feedback