How difficult is it to perform your own Drawdown

Albermarle

Audaxer said:

Albermarle said:

Dansmam said:

CloesUnc said:

I intend to drawdown £16,760 per year, from a SIPP containing 5 years' worth of cash. This is equivalent to the £12,570 tax allowance plus 25% tax free, which equates to £12,570 / 0.75.

My intention is to take an income of £16,760 / 12 = £1396 per month.

As I understand from reading yesterday:

If I do this by taking a UFPLS each month, my current provider would charge me £50 + VAT for each time!

But if I do it by phased drawdown, 25% tax free up front and the rest monthly income, I would not be charged for it.

It seems there is a price to pay for what is essentially the same result!

If you keep it in cash with Hargreave Lansdown there's no charge. Or at least there wasn't this tax year when I did exactly that 

That is because HL have a higher charge in the first place . 

I'm not sure what you mean by a higher charge in the first place? If you open a SIPP with HL, say in retirement, and keep it in cash, drawing it out by UFPLS each year after tax relief is added, there is no charge at all, unless things have recently changed? 

If kept in cash you are right . The OP was taking about an invested fund of £250K but this other cash  poster joined  the thread later.
What I meant is or people invested in funds , HL has the highest platform charge but does not charge for drawdown , or mauch else. Same with Fidelity but their platform charge is a bit less. Other cheaper platforms tend to have add on charges.

Skinnydad

Thanks for you patience folks I'm still waiting on Aegon coming back to me.  These folks don't appear to be in a hurry to respond. I'll need to call them.  Once I find out what options are available, I'll be back to my original question.  How difficult is it to drawdown £16K a year from my SIPP.  I've used up my £12750 Tax allowance on my other pensions. so I'm reckoning £16K. 3K on tax at 20% leaving 13K to be taken at 1K+ a month.  Am I correct in saying that 4K of this 16K would be part of my TFLS (as I've not taken any of it) leaving 12K to be taxed at 20%.  Equals £2400.  Would this leave me with £9,600 plus the 4K TFLS equalling £13,600 in my pocket?  

Thanks again..

zagfles

Skinnydad said:

Thanks for you patience folks I'm still waiting on Aegon coming back to me.  These folks don't appear to be in a hurry to respond. I'll need to call them.  Once I find out what options are available, I'll be back to my original question.  How difficult is it to drawdown £16K a year from my SIPP.  I've used up my £12750 Tax allowance on my other pensions. so I'm reckoning £16K. 3K on tax at 20% leaving 13K to be taken at 1K+ a month.  Am I correct in saying that 4K of this 16K would be part of my TFLS (as I've not taken any of it) leaving 12K to be taxed at 20%.  Equals £2400.  Would this leave me with £9,600 plus the 4K TFLS equalling £13,600 in my pocket?  

Thanks again..

It should be easy. Depending what options they offer, either set up a monthly drawdown where they pay 25% tax free and 75% taxable, or crystallise £16k each year and take £4k tax free up front and £1k taxable a month. Or you could take a £16k annual UFPLS, but then you'd probably have to mess around with HMRC getting tax rebates. They all work out very similar, but which to use depends on what the provider offers and what's easiest with them.

Skinnydad

Good evening folks, so sorry for the time delay in responding to any outstanding answers I was to Find. I started enquiring with Aegon in March this year and finally got some answers the other day (October) how’s that for a turnaround! I was asking how I go about taking money from my Aegon SIPP when I turn 66 without using an IFA. Here’s what I was told and was wanting to run this past anyone to see if this makes sense and if I’ve missed anything.

Here was my initial request:

I’m currently in receipt of 2 pensions and will get the full state pension on my 66th birthday. I have no intention of taking an annuity and I’m looking to begin drawing down from my Aegon fund in approx. 2 years’ time. This will be on my 66th Birthday. I would like a regular income, so for example say I want to take 16K a year. I’d like 4K of this TFLS (25%) leaving 12K to be taxed at the appropriate rate. This would say give me just over 1K a month for a year. Then the same the next year and next. With the flexibility of altering where possible.

In a nutshell how do I go about doing this when the time comes?

What charges are applied to this process?

Are the charges cheaper, taking annually or the same monthly over the year?

What forms do I need to request to begin this process and what is the average length of time required for Aegon to turn these around?

I'm thinking of either a monthly UFPLS or an annual FAD. What are the fees for either of these? and if I go monthly do I pay a fee monthly or is it a one off cost per year?

I've heard that some firms take a monthly fee if you opt monthly, whereby it may be beneficial to take an annual drawdown which would incur a single fee once per year. I'm sure you've got an idea where I'm coming from.

How the platform takes income. Is it cash first, largest first, smeared across all and what options (if any) do I have for how this works and what happens when wrapped cash is exhausted and income (or platform fees) are due.

The response I got was as follows:

If you do want to take a tax-free payment and then start income, there are two options. You can do this on a non-advised basis using our AEGON Assist team. They can process a BCE, pay you a tax-free amount and move you into FAD for you to then start taking income. However, as stated, they can only help if you’re taking a minimum tax-free payment of £5,000.00. In your below example, you said you may look to take £4,000.00 with £16,000.00 moving to FAD. Our AEGON Assist team won’t be able to process this, so you would need to go through a financial adviser. 

If you do decide to take a minimum £5,000.00 tax-free payment and continue with our non-advised service, I would recommend speaking with us approx. 3-4 months before your birthday. 

This will allow time to arrange an appointment with our team and explain the process and fees. 

You will continue to pay our AEGON administration fee. We won’t charge you anything for processing your BCE and paying your tax-free lump sum. We do have an annual fee of £75.00 when you start taking income. This will not change whether you take a one-off income payment or income on a monthly basis.

 When we move your funds into FAD, you will be given an online log in to manage this pension and you will set up any ad-hoc or monthly income using your online service.

If you continue to take a partial UFPLS, there are no fees involved with this payment.

If you enter FAD and take income, it will be your responsibility to ensure there is enough funds in your cash facility to pay your income as well as any charges that are due. However, you can set up a recurring switch from funds to keep your cash facility topped up. 

When you have exhausted all of your funds, the policy will become de-active, and no further income paid. 

If you do wish to enter FAD using our AEGON Assist service, I would recommend calling our contact centre before you turn 66, as above, and they can arrange an appointment with our team to start the process. 

Some final questions to the Forum, if you please

Aegon mainly talks about a FAD, I was thinking UFPLS.  What are the differences please?

I wonder why if I want to take any less than 5K Tax free I need to involve an FA, Any ideas?

Is there an issue with taking 5K tax free as opposed to my original requirement of 4K?

I never seem to have got the answer as to how the platform takes income though

Is there any obvious questions I may have missed?

And I was thinking of going to the Ombudsman with this. Asked in March, 16 emails, phone calls etc. and get these answers in October!!!

Thanks in advance.

Skinnydad

another response from Aegon:

As stated in my earlier email. we can’t help you if you are looking to take a £4,000.00 tax free payment. Our AEGON Assist team can only process a request with a minimum amount of £5,000.00. If anything under this value, you will have to have a financial adviser process this request for you.

Our AEGON Assist team can process a request for £20,000.00. £5,000.00 will be paid to you tax-free and the remaining £15,000.00 will move to FAD.

When the funds are held in FAD, you can then set up regular monthly income, using your online service.

dunstonh

Aegon mainly talks about a FAD, I was thinking UFPLS.  What are the differences please?

UFPLS is a withdrawal that consists of 75/25% split.  e.g. £10k out, paid as 75% taxable and 25% tax free.  
FAD is where you access some or all of the 25% but less than 75% of the taxable element.

I wonder why if I want to take any less than 5K Tax free I need to involve an FA, Any ideas?

it is cheaper for providers for advisers to do all the work.   If someone is taking less than £5k, then its likely its going to be more frequent and that increases costs.  So, they put an internal blocker on it for their in-house team.  They are not going to stop advisers doing it though as its up to advisers how they run their business.

I never seem to have got the answer as to how the platform takes income though

Can you clarify what you mean by that.   A platform would pay an income but it doesn't take an income.

And I was thinking of going to the Ombudsman with this. Asked in March, 16 emails, phone calls etc. and get these answers in October!!!

Well, it is Aegon.  You cannot go to the FOS.   The FOS is an independent arbiter of complaints if you become deadlocked with the firm in a complaint.    Until you have made a complaint and had a response or 8 weeks has passed, the FOS cannot get involved.

have you considered looking at a proper direct to consumer offering rather than one that isn't really geared for that?

MallyGirl

I never seem to have got the answer as to how the platform takes income though

I 'think' this is covered by the part about you ensuring that you have sufficient funds in your cash facility. In other words it is up to you to sell whatever holdings you want in order for there to be cash to drawdown

Albermarle

Aegon mainly talks about a FAD, I was thinking UFPLS.  What are the differences please?I wonder why if I want to take any less than 5K Tax free I need to involve an FA, Any ideas?Is there an issue with taking 5K tax free as opposed to my original requirement of 4K?

You may be better to transfer to a pension provider, more geared up for dealing with the public. 

Quicker responses/better customer service. No limits on how much/little tax free cash to take.

Only thing to watch is taking regular UFPLS payments can be messy admin wise. Probably better to do FAD for monthly payments, or take one UFPLs payment a year and put it in a savings account for regular withdrawal.

L9XSS

Albermarle said:

Aegon mainly talks about a FAD, I was thinking UFPLS.  What are the differences please?I wonder why if I want to take any less than 5K Tax free I need to involve an FA, Any ideas?Is there an issue with taking 5K tax free as opposed to my original requirement of 4K?

You may be better to transfer to a pension provider, more geared up for dealing with the public. 

Quicker responses/better customer service. No limits on how much/little tax free cash to take.

Only thing to watch is taking regular UFPLS payments can be messy admin wise. Probably better to do FAD for monthly payments, or take one UFPLs payment a year and put it in a savings account for regular withdrawal.

Completely agree. Having read the thread imho other providers (HL, Fidelity, Vanguard) to name just a few appear to be more geared up for FAD or UFPLS. I’ve used the above three for crystallising part of a pension,taking a 25% TFLS, transferring an old DC pension, utilising a small pot pension and it’s  all been very straightforward. 

zagfles

Why not just take £5k PCLS, leaving the other £15k to be spread over a year and 3 months, same end result, just you're taking a bit more PCLS up front. You can still draw from the taxable part at the exact same rate, eg £1k a month, so the tax situation should be the same.

So instead of crystallising £16k every year taking £4k PCLS then £1k a month taxable, you crystallise £20k every 15 months, taking £5k PCLS and taking £1k a month taxable.