Managing Monthly SIPP Drawdown Payments

Beckster1964

I would be grateful if anybody could explain/offer advice on the easiest way to manage SIPP drawdowns with AJBell, particularly in terms of the 25% tax free element. I want to initiative a monthly payment from my SIPP but I’m unsure how to efficiently take the 25% tax free part. Looking at the AJBell website, it looks like they will only enable a taxed withdrawal from the drawdown account. Would it be a question of having to crystallise a small amount every month? Ideally I want an approach that once set up is not overly time consuming. Any advice/insights would be much appreciated!

Albermarle

You could take an UFPLS payment. This is exactly 25% tax free and 75% taxable. So you would be crystallising just a part of your pension each time.
However most retail platforms do not facilitate monthly UFPLS payments. One way around this is to take an annual payment and put it in an easy access savings account and withdraw it when needed.

SVaz

If you wanted £5k tfc for example,  simply crystalise £20k and leave the £15k behind. 

That’s what I’ll do with one of my sipps at 67,  I’ll take only tax free cash for 8-10 years, until the pot is fully crystalised.   

squirrelpie

Albermarle said:

You could take an UFPLS payment. This is exactly 25% tax free and 75% taxable. So you would be crystallising just a part of your pension each time.
However most retail platforms do not facilitate monthly UFPLS payments. One way around this is to take an annual payment and put it in an easy access savings account and withdraw it when needed.

Instead of taking an annual UFPLS you could also set up a one year monthly drawdown. You could take the tax free 25% and either keep it separate or put it into a savings account and use it to top up the monthly taxable payments.

eastcorkram

Albermarle said:

You could take an UFPLS payment. This is exactly 25% tax free and 75% taxable. So you would be crystallising just a part of your pension each time.
However most retail platforms do not facilitate monthly UFPLS payments. One way around this is to take an annual payment and put it in an easy access savings account and withdraw it when needed.

Does that mean that if the platform can't do monthly UFPLS payments, that if you do take the 25% tfls at the start, that you then could do a monthly payment from what's left?

squirrelpie

I think Albemarle was talking about taking a single annual UFPLS and dividing it up into monthly payments as needed afterwards. I suggested an alternative using monthly payments from a drawdown plan rather than UFPLS. Apologies for any confusion.

Beckster1964

thanks for all your replies thus far - very helpful.

Albermarle

You could benefit from a free chat with PensionWise. A government service.