Which provider/platform for phased drawdown

ali_bear

I am planning to retire in the next year or two and have a healthy DC fund. SP is still quite a few years away. Also have some cash savings and a S&S ISA. My approach to the DC pension is DIY and I have decided on the phased drawdown method.

I am now shopping around for the provider and platform because:

1. I am not sure my current provider will support phased drawdown
2. Looking for low fees
3. Want an online platform that is not horrible to use, for managing the investment and the phased drawdowns 

The first two are easy enough to determine by shopping around on-line. But I suspect number 3 won't be apparent until I start using the platform. 

Appreciate the combined wisdom and advice available through this forum. Some of you are obviously experienced, experts, IFA's etc. If it's too difficult or you don't want to post on the forum any recommends or avoidances please feel free to direct message me with whatever you want to say in private. All guidance is welcome. 

Thanks in advance!

https://www.youtube.com/watch?v=riG85oA6Wy4
Felice Navidad 

Albermarle

I am not sure my current provider will support phased drawdownLooking for low feesWant an online platform that is not horrible to use, for managing the investment and the phased drawdowns 
You will probably get some better answers, if you name your current platform and have you actually checked with them what they can offer for drawdown, and what their fees are. hen we have a kind of benchmark.As a general comment the modern SIPP providers usually have better functionality/flexibility than the more traditional insurers ( like Scottish Widows, Aegon, Prudential etc ), although there are exceptions.

gm0

Consider how specific you are going to be about what "phasing" means in your plan.  Range.  What funds you want and prices are more important than detailed mechanics.  Most desired cashflow shapes can be done at most places.  Paperwork load will vary if working with or against the grain of how that platform typically works.

Expectations you have about what "good digital" looks like.  I want web pc, limit orders, access to fund sheets and basic data. And I am done. How pretty it looks is less important to me.  So for me Fidelity is great.  Others might disagree. For me having mobile apps is irrelevant as I won't be installing or using it. If a platform focuses on it with new channel specific app only functionality or worse becomes entirely App only then that for me - is a reason to leave.  And go somewhere multi-channel.

I find the Fidelity web site does what I need functionally and beyond that I don't care.  It's a cheap place to hold ETFs for a larger DC pot with the £95 cap.  Limit orders - check.  Income from nominated fund - others untouched - check.

Others would dislike their web support and document handling and think it old and clunky.  I have found their staff helpful and professional to date.   Of course all platforms have long running transfer and specific customer horror stories where they handled something poorly

Another feature based example. Vanguard's retail pension product when I was setting up revealed they liked to sell for income across funds not from a nominated one to generate cash for income.  This approach preserves asset allocation.  Some people *want* that and to hold 0 cashlike inside the pension. It is logical in its own terms.  But it can mean automated sales to cash for income happen outside your explicit control and thus may do so in volatility spikes.  If you planned to use a cash buffer to pay income from - with no automated trading for income. i.e. rebalancing and trading happen only when you want to.  The control aspects are more in your hands.  And most of us want some income buffer (for sequence risk) - somewhere - inside or outside.   Which is better from an investment returns perspective is debatable. Testing likely supports maximising staying invested - but sadly not every time and not all the time for every individual.  Sequence.

In the detail you likely need to work with the grain of the way a platform does it (has its IT setup).  Other platforms let you nominate the fund from which cash income is drawn and the "rule" to be applied if "available" cash is exhausted.  This can be "stop".  Sell across all.  Sell from biggest by value.  Sell from nominated.

Phasing income

Crystallising part of a fund with FAD is very widely supported.  Which is phasing.  A partial transfer in from an older occupational achieves a phasing of sorts if the target is feature deficient.

UFPLS is widely supported for one offs which suits annual.

But if you want small and frequent UFPLS e.g. monthly.  And to endure minimal compliance processes designed around that feature - you will have to wait for someone who does that successfully on platform x,y,z to comment on their positive experience.   Some platforms apply a blunt compliance process to crystallisation which is better suited to annual or quarterly.   And clearly designed as a low volume transaction which has not received investment for automation.

I have monthly income.  But I don't do monthly sales/crystallisation. I trade at rebalancing to provision income buffer. And the fund is crystallised (FAD).  Another fund untouched.  Is uncrystallised.  My approach suited me and the tax rules at the time I did it.  For me at that time monthly UPLS was the inferior option.  Tax rules changed twice since and will again.   So anything you do will be superceded by events. 

Monthly UFLPS has its charms around in year income tax using TFC that way.  And growing the uncrystallised TFC if there is headroom to do so.

ali_bear

Current provider does offer phased drawdown, but it seems like kind of an add-on feature and not particularly useful. Once some of your fund goes into a separate drawdown pot you can have it as taxable income, but the platform won't allow you to set up a monthly automated payment from this pot. Which is surprising to me.

They do also offer a SIPP which does offer the features I want, so if I stick with them I just have to do the transfer to set it going. So effectively I am now shopping around for a SIPP. 

ali_bear

What is key for me is flexibility around what I do with the TFLS. I don't want to take it all at the start and have to manage that money through investments. I would rather most of it stays in the pension with the benefit of untaxed growth. But then I want to be able to take most of it out in one go if I need to in the future. For example, to move to a bigger house or a better area. 

Albermarle

ali_bear said:

What is key for me is flexibility around what I do with the TFLS. I don't want to take it all at the start and have to manage that money through investments. I would rather most of it stays in the pension with the benefit of untaxed growth. But then I want to be able to take most of it out in one go if I need to in the future. For example, to move to a bigger house or a better area. 

That would not  be a problem with most modern providers/plans.
Only older pensions ( started some years ago) would possibly only have the option to take all the TFLS in one go, and not in stages.

ali_bear

I should have checked the forum stickies, there is this recently updated article: https://www.moneysavingexpert.com/savings/cheap-sipps 

gm0

If you don't want to do ISA recycling (which isn't really more complicated than a different "pot". (S&S ISA at same provider). 

Then you want UFPLS and to keep uncrystallised TFC waiting for later with the rest of the uncrystallised portions.   Subject to regulatory risk on not yet accessed benefits.  And fiscal drag on the LSA limit vs gross investment returns (inclusive of inflation).  But otherwise uncontroversial.

AFAIK - you can't decant it off as "taken" (ahead of further regulatory change) yet still be inside the pension

As I understood it UFPLS (TFC a bit at a time with the 75% income - salami).  FAD (25% TFC taken out or partialy or wholly foregone for the chunkier piece placed into drawdown "marked for income"".   Certainly those were the rules.  And so a lot of provider support would look like that and lag if it has indeed changed.  

Parking TFC associated with a crystallised chunk and taking it "later" without income attached wasn't a thing.  Of course if the provider sets up a cash account for TFC to go into for you - this looks much the same.  But it is not INSIDE the pension anymore from a tax wrapper perspective. As the TFC has been "taken out".  and the 75% crystallised and marked for income.

That's my understanding but the world may have moved on a bit without me noticing.

ali_bear

I would like to be able to access some TFC from the fund without triggering the MPAA just yet. Just in case I decide to return to work within maybe 18 months of stopping. 

Seems that I should be able to do a partial transfer out my current fund into a SIPP. Take TFC from that and then later drawdown income for 2-3 years. Possibly benefiting from a cashback offer for the transfer in.