Is this UFPLS without calling it such?

arthur_fowler

My current holder of my 2 DC pots is Lifesight (WTW). I am a couple of years off retirement and when considering options I was thinking that I would have to move the pot(s) if I elect to use UFPLS as I didn't think that UFPLS was an option from Lifesight (they only talk about 3 options; cash, drawdown, annuity). But when I read behind the scenes in the documentation they describe 2 drawdown options thus:

As part of your retirement decisions, you should also consider tax and how to access the 25% of your pension savings that is available to be taken tax free. If you are yet to take advantage of your entitlement to receive 25% of your fund value tax free, your options are as follows:
1. You can choose to take 25% of each withdrawal you make tax free, paying tax on the remaining 75%. This will be the default unless you tell the LifeSight Team otherwise
2. You can choose to take your 25% tax-free lump sum at any time, either via the Application Form you complete when you join or through your LifeSight Account at a later date. Please note that you can only do this once and after that your remaining funds will be taxed as income.

Am I missing something or is option 1 actually UFPLS?

jamesd

Option 1 is UFPLS.

Option 2 is taking the tax free lump sum and probably placing the 75% into a flexi-access drawdown account from which you can withdraw taxable money whenever you like.

squirrelpie

Option 2 seems to be all or nothing. There doesn't seem to be any way to crystallize part of your pension and take the corresponding tax free amount. IT sounds to me like they only maintain one balance for pensioners, rather than the two that are needed for full drawdown flexibility.

leosayer

I'm with LifeSight and this page seems to give some more details:

https://epa.towerswatson.com/my-future/accessing-my-lifesight-savings/

Ways to access your savingsFrom age 55 (or earlier if you have been told you have a Protected Retirement Age in LifeSight) you can access your savings through Drawdown, Annuity or Cash. You can choose one, or a combination, of these options.
Drawdown: You withdraw money from your savings as and when you need it, just like a regular bank account. The rest of your savings remain invested. You can either continue making withdrawals until you have used all your savings, leave some invested for your beneficiaries, or use some or all of the savings to buy an annuity at a later date.

Annuity: A contract with an insurance company that, in exchange for some or all of the value of your LifeSight Account, provides you with a regular income for a guaranteed period, usually as long as you live.

Cash: You withdraw all your LifeSight savings in a single lump sum, or as two single withdrawals over consecutive tax years. Please note that taking all of your savings in one lump sum may mean that your tax bracket changes and the rate of tax you pay may be higher than if you withdrew your savings over a longer period.

Tax-free cash

"You can usually take up to 25% of your benefits (or 25% of the value of your available Lifetime Allowance if lower) as a tax-free cash lump sum.

Alternatively, if you choose not to take a tax-free cash lump sum and move to drawdown, 25% of each of your future withdrawals will usually be paid tax-free, with the remainder subject to income tax at your marginal rate."

Albermarle

As @squirrelpie says there is no option to take the 25% tax free cash in stages, with no taxable income. Plus no option to mix and match tax free and taxable less rigidly than 25/75.
So for full flexibility the pot would have to be transferred to another provider, who did offer the full list of options.

jamesd

Given that, I also suggest that you might be better off moving the money to a place which offers you the full range of options.

Itsme01x

Albermarle said:

As @squirrelpie says there is no option to take the 25% tax free cash in stages, with no taxable income. Plus no option to mix and match tax free and taxable less rigidly than 25/75.
So for full flexibility the pot would have to be transferred to another provider, who did offer the full list of options.

Happy to be corrected, but isnt Option 1 UFPLS, albeit the OP will need to clarify what is meant each withdrawal and as suggested from the website quote from @leosayer .

The OP will also need to clarify whether if more than one withdrawal is allowed over a period of time - is this only one per year, every six months, each month or an unlimited amount of withdrawals each year.  There may also be a fee to pay for each withdrawal, or other t&c's

Albermarle

Itsme01x said:

Albermarle said:

As @squirrelpie says there is no option to take the 25% tax free cash in stages, with no taxable income. Plus no option to mix and match tax free and taxable less rigidly than 25/75.
So for full flexibility the pot would have to be transferred to another provider, who did offer the full list of options.

Happy to be corrected, but isnt Option 1 UFPLS, albeit the OP will need to clarify what is meant each withdrawal and as suggested from the website quote from @leosayer .

The OP will also need to clarify whether if more than one withdrawal is allowed over a period of time - is this only one per year, every six months, each month or an unlimited amount of withdrawals each year.  There may also be a fee to pay for each withdrawal, or other t&c's

Option 1 is UFPLS. What I was saying that other providers offer more options than just UFPLS and taking all the 25% tax free in one go. So there would be more options with some other providers than just 1 & 2. 

leosayer

jamesd said:

Given that, I also suggest that you might be better off moving the money to a place which offers you the full range of options.

That's what I was already planning to do because I find LifeSight's investment options somewhat limited and they failed to answer my request to extend them. For example they don't have any short or medium term bond/gilt funds.

For the time being though I'm locked into them because my pot has a link to my DB scheme.

Prism

Option one could be flexi-access drawdown too, doesn't have to be UFPLS

squirrelpie

Prism said:

Option one could be flexi-access drawdown too, doesn't have to be UFPLS

How do you work that out?