Drawdown strategy and charges

Albermarle

I can't say how this compares to other providers. I have read Hargreaves Lansdown are well rated for customer support and overall service but do your own research.

Although some providers seemed to be hampered by older systems , too many forms etc , the other issue is that when you crystallise an amount they have to show that they have discussed with you certain issues. Such as basically do you really understand what you are doing, or are you aware the money may run out too quick if you take too much now etc etc.
It seems for a couple of the newer providers ( Pension Bee has been mentioned in other threads as an example ) you just need to answer a few online questions . Other providers insist on an hour long telephone discussion. You could interpret that as over the top , nanny state etc or you could say it is good they are prepared to spend time with you to explore all options. Opinions will vary.

Billxx

I use Royal London.  As a mutual I find their charges are reasonable and their customer services are very good.  Setting up a regular drawdown requires a bit of form filling but not too onerous.  I take a combination of tax free and taxable sums each month.

green_man

dunstonh said:

- Do they draw out a monthly amount, or generally the amount needed for a whole year?

They draw out using the method that is most suitable for their objectives and circumstances.

I find most people used monthly phased drawdown (phased UFPLS).  

- Is there typically a charge per withdrawal and if so is it large?

Most providers no longer charge for drawdown.

- Is it easy to drawdown money from there, just like making a bank transfer on your online banking or are there forms to fill which has to be physically sent?

No. it is not as easy.    If you use an adviser, they will do it for you and is the least work.   However, an adviser costs money.   If you DIY, then you will need to go through the provider's process each time.   Some providers will require you to book a phone call in advance and take 30-90 minutes to handle the work.   Others have an online process.   Some will follow up with paper forms posted for signature that need returning.   Often, where the provider is heavy on work, the person will be more inclined to do it annually (or find a better provider)

dunstonh said:

On the DIY side, the platforms/providers nearly all (if not all) do not seem to facilitate monthly phased drawdown (monthly UFPLS).   On the advised side they do

If you are setting up monthly flexi-access drawdown (75% element only) then they will do that with just a single setup.

The above is pretty much what I found when setting up my drawdown a couple of years ago.  If you go with the low cost DIY platforms it is likely you will have to deal with more paperwork and may not be able to do monthly UFPLS in a cost effective way.  I use Halifax SIPP which saves me around thousands in charges per year compared to Hargreaves’s Langsdown for example, and likely more compared to advised. I then do one yearly UFPLS into a holding account and pay monthly from there into my current account.  

The UFPLS process is a pain, but once a year isn’t too onerous, and when you’ve done it a couple of times the documentation becomes second nature.

Albermarle

green_man said:

dunstonh said:

- Do they draw out a monthly amount, or generally the amount needed for a whole year?

They draw out using the method that is most suitable for their objectives and circumstances.

I find most people used monthly phased drawdown (phased UFPLS).  

- Is there typically a charge per withdrawal and if so is it large?

Most providers no longer charge for drawdown.

- Is it easy to drawdown money from there, just like making a bank transfer on your online banking or are there forms to fill which has to be physically sent?

No. it is not as easy.    If you use an adviser, they will do it for you and is the least work.   However, an adviser costs money.   If you DIY, then you will need to go through the provider's process each time.   Some providers will require you to book a phone call in advance and take 30-90 minutes to handle the work.   Others have an online process.   Some will follow up with paper forms posted for signature that need returning.   Often, where the provider is heavy on work, the person will be more inclined to do it annually (or find a better provider)

dunstonh said:

On the DIY side, the platforms/providers nearly all (if not all) do not seem to facilitate monthly phased drawdown (monthly UFPLS).   On the advised side they do

If you are setting up monthly flexi-access drawdown (75% element only) then they will do that with just a single setup.

The above is pretty much what I found when setting up my drawdown a couple of years ago.  If you go with the low cost DIY platforms it is likely you will have to deal with more paperwork and may not be able to do monthly UFPLS in a cost effective way.  I use Halifax SIPP which saves me around thousands in charges per year compared to Hargreaves’s Langsdown for example, and likely more compared to advised. I then do one yearly UFPLS into a holding account and pay monthly from there into my current account.  

The UFPLS process is a pain, but once a year isn’t too onerous, and when you’ve done it a couple of times the documentation becomes second nature.

This seems to be the simplest away around the issue . Although is it not important at what time of the tax year, you take this annual  UFPLS? Presume if you take it early in the tax year HMRC will assume you are going to receive that taxable income every month, and tax you accordingly , probably hitting you with some 40% tax . I know you will get back what they owe you in the end, but is it better to take it in March so you are more likely to get correctly taxed . Just asking out of interest .

zagfles

green_man said:

dunstonh said:

- Do they draw out a monthly amount, or generally the amount needed for a whole year?

They draw out using the method that is most suitable for their objectives and circumstances.

I find most people used monthly phased drawdown (phased UFPLS).  

- Is there typically a charge per withdrawal and if so is it large?

Most providers no longer charge for drawdown.

- Is it easy to drawdown money from there, just like making a bank transfer on your online banking or are there forms to fill which has to be physically sent?

No. it is not as easy.    If you use an adviser, they will do it for you and is the least work.   However, an adviser costs money.   If you DIY, then you will need to go through the provider's process each time.   Some providers will require you to book a phone call in advance and take 30-90 minutes to handle the work.   Others have an online process.   Some will follow up with paper forms posted for signature that need returning.   Often, where the provider is heavy on work, the person will be more inclined to do it annually (or find a better provider)

dunstonh said:

On the DIY side, the platforms/providers nearly all (if not all) do not seem to facilitate monthly phased drawdown (monthly UFPLS).   On the advised side they do

If you are setting up monthly flexi-access drawdown (75% element only) then they will do that with just a single setup.

The above is pretty much what I found when setting up my drawdown a couple of years ago.  If you go with the low cost DIY platforms it is likely you will have to deal with more paperwork and may not be able to do monthly UFPLS in a cost effective way.  I use Halifax SIPP which saves me around thousands in charges per year compared to Hargreaves’s Langsdown for example, and likely more compared to advised. I then do one yearly UFPLS into a holding account and pay monthly from there into my current account.  

The UFPLS process is a pain, but once a year isn’t too onerous, and when you’ve done it a couple of times the documentation becomes second nature.

If you want monthly payments I'd have thought it'd be easier to phase drawdown eg crystallise a year's worth annually taking the TFLS and then drawing down monthly direct to your current account rather than via a holding account? Or do Halifax charge more for this?

AlanP_2

Albermarle said:

green_man said:

dunstonh said:

- Do they draw out a monthly amount, or generally the amount needed for a whole year?

They draw out using the method that is most suitable for their objectives and circumstances.

I find most people used monthly phased drawdown (phased UFPLS).  

- Is there typically a charge per withdrawal and if so is it large?

Most providers no longer charge for drawdown.

- Is it easy to drawdown money from there, just like making a bank transfer on your online banking or are there forms to fill which has to be physically sent?

No. it is not as easy.    If you use an adviser, they will do it for you and is the least work.   However, an adviser costs money.   If you DIY, then you will need to go through the provider's process each time.   Some providers will require you to book a phone call in advance and take 30-90 minutes to handle the work.   Others have an online process.   Some will follow up with paper forms posted for signature that need returning.   Often, where the provider is heavy on work, the person will be more inclined to do it annually (or find a better provider)

dunstonh said:

On the DIY side, the platforms/providers nearly all (if not all) do not seem to facilitate monthly phased drawdown (monthly UFPLS).   On the advised side they do

If you are setting up monthly flexi-access drawdown (75% element only) then they will do that with just a single setup.

The above is pretty much what I found when setting up my drawdown a couple of years ago.  If you go with the low cost DIY platforms it is likely you will have to deal with more paperwork and may not be able to do monthly UFPLS in a cost effective way.  I use Halifax SIPP which saves me around thousands in charges per year compared to Hargreaves’s Langsdown for example, and likely more compared to advised. I then do one yearly UFPLS into a holding account and pay monthly from there into my current account.  

The UFPLS process is a pain, but once a year isn’t too onerous, and when you’ve done it a couple of times the documentation becomes second nature.

This seems to be the simplest away around the issue . Although is it not important at what time of the tax year, you take this annual  UFPLS? Presume if you take it early in the tax year HMRC will assume you are going to receive that taxable income every month, and tax you accordingly , probably hitting you with some 40% tax . I know you will get back what they owe you in the end, but is it better to take it in March so you are more likely to get correctly taxed . Just asking out of interest .

March would work well but in my experience (1 year) a refund claim to HMRC took less than 3 weeks so personally I don't worry about timing based on tax.

green_man

Albermarle said:

This seems to be the simplest away around the issue . Although is it not important at what time of the tax year, you take this annual  UFPLS? Presume if you take it early in the tax year HMRC will assume you are going to receive that taxable income every month, and tax you accordingly , probably hitting you with some 40% tax . I know you will get back what they owe you in the end, but is it better to take it in March so you are more likely to get correctly taxed . Just asking out of interest .

I haven’t been able to get HMRC to tax me correctly whenever I take the withdrawal,  I’ve taken one withdrawal towards the end of the tax year and one at the start, both required reclaiming via P55(?).  I did find it took a bit longer to reclaim the tax when I withdrew on 6th April, probably just the HMRC workload (Longer than the 3 weeks Alan suggests). However for me doing everything in one tax year keeps it clean, I withdraw a lump sum into a holding account, reclaim the tax which gets put in about a month later. This money then lasts me the year.

zagfles said:

If you want monthly payments I'd have thought it'd be easier to phase drawdown eg crystallise a year's worth annually taking the TFLS and then drawing down monthly direct to your current account rather than via a holding account? Or do Halifax charge more for this? 

in the case of Halifax SIPP this option would cost double in charges for no benefit that I can see. Obviously with a different provider this or other alternatives may be more cost effective.

zagfles

green_man said:

Albermarle said:

This seems to be the simplest away around the issue . Although is it not important at what time of the tax year, you take this annual  UFPLS? Presume if you take it early in the tax year HMRC will assume you are going to receive that taxable income every month, and tax you accordingly , probably hitting you with some 40% tax . I know you will get back what they owe you in the end, but is it better to take it in March so you are more likely to get correctly taxed . Just asking out of interest .

I haven’t been able to get HMRC to tax me correctly whenever I take the withdrawal,  I’ve taken one withdrawal towards the end of the tax year and one at the start, both required reclaiming via P55(?).  I did find it took a bit longer to reclaim the tax when I withdrew on 6th April, probably just the HMRC workload (Longer than the 3 weeks Alan suggests). However for me doing everything in one tax year keeps it clean, I withdraw a lump sum into a holding account, reclaim the tax which gets put in about a month later. This money then lasts me the year.

zagfles said:

If you want monthly payments I'd have thought it'd be easier to phase drawdown eg crystallise a year's worth annually taking the TFLS and then drawing down monthly direct to your current account rather than via a holding account? Or do Halifax charge more for this? 

in the case of Halifax SIPP this option would cost double in charges for no benefit that I can see. Obviously with a different provider this or other alternatives may be more cost effective.

The benefit is that you don't need to reclaim tax, it's all sorted via PAYE, and you don't need to use a "holding account", you just take what you need when you need it. But if the charges are significantly higher it might be worth a bit of messing around.

Linton

People have talked about the problem of getting the provider to pay out.  There is another one - possibly depending on provider, it is your responsibility to ensure that there is sufficient cash in your account to pay the pension and it needs to be available perhaps 2 weeks before payment date.  So if you want to be paid monthly you need to sell sufficient investments in time.  Doing this every month would be a hassle.

So in my view it is much easier just to have one annual drawdown.

Time4T_Accounts

Linton said:

People have talked about the problem of getting the provider to pay out.  There is another one - possibly depending on provider, it is your responsibility to ensure that there is sufficient cash in your account to pay the pension and it needs to be available perhaps 2 weeks before payment date.  So if you want to be paid monthly you need to sell sufficient investments in time.  Doing this every month would be a hassle.

So in my view it is much easier just to have one annual drawdown.

Cue discussion about timing the market ... !!!

Seriously, though, it would be too easy to spend an awful lot of time trying to get this ‘right’ . OP’s question certainly resonates with me.  Better Half, SWMBO, has a db pension in payment: gold-plated, Civil Service, and, absolutely most importantly, worry-free...