Monthly money from pension lump sum

gadger999

Hiya all....I'm thinking of starting a partial encashment of my pension pot....
15k withdrawal gets me roughly 12.7 k after tax free portion and the 20% tax on remainder...I get this as a lump sum.
My question is what's the best way to transfer 1k per month into my bank account on a regular basis until money runs out....separate savings account with direct debit ????
Ifso any ideas on options
Regards...

dunstonh

My question is what's the best way to transfer 1k per month into my bank account on a regular basis until money runs out....separate savings account with direct debit ????

Best is subjective.

Why not draw £1000pm from the pension?

Linton

gadger999 said:

Hiya all....I'm thinking of starting a partial encashment of my pension pot....
15k withdrawal gets me roughly 12.7 k after tax free portion and the 20% tax on remainder...I get this as a lump sum.
My question is what's the best way to transfer 1k per month into my bank account on a regular basis until money runs out....separate savings account with direct debit ????
Ifso any ideas on options
Regards...

What sort of pension do you have?  For example is it a SIPP which will be very flexible or an old employer's scheme which may not?

Two aspects on taking a steady income:

1) UFPLS or taxed drawdown
Under UFPLS you withdraw a lump sum each time (eg monthly) that is comprised of 25% tax free and 75% tax.  So you dont take the entire tax free portion first, you get some of it with each payment.

Under the taxed drawdown option you do take all the tax free first and then the regular income is all taxable.

Different pension providers may support either or both options.

2) Frequency of drawdown
Taking any lump sum from a pension can be a hassle.  Depending on your provider you may have to ensure that the cash is available sitting in your pension account perhaps 2 weeks before payment is due. You probably would not want to sell investments every month to free up the cash. Some providers may automatically sell investments for you when needed, others wont.

An alternative could be to take one large payment each year. You could put it in a savings account and move a lump sum into your current account each month.

gadger999

dunstonh said:

My question is what's the best way to transfer 1k per month into my bank account on a regular basis until money runs out....separate savings account with direct debit ????

Best is subjective.

Why not draw £1000pm from the pension?

Rather do 1 per year ATM...

gadger999

Linton said:

gadger999 said:

Hiya all....I'm thinking of starting a partial encashment of my pension pot....
15k withdrawal gets me roughly 12.7 k after tax free portion and the 20% tax on remainder...I get this as a lump sum.
My question is what's the best way to transfer 1k per month into my bank account on a regular basis until money runs out....separate savings account with direct debit ????
Ifso any ideas on options
Regards...

What sort of pension do you have?  For example is it a SIPP which will be very flexible or an old employer's scheme which may not?

Two aspects on taking a steady income:

1) UFPLS or taxed drawdown
Under UFPLS you withdraw a lump sum each time (eg monthly) that is comprised of 25% tax free and 75% tax.  So you dont take the entire tax free portion first, you get some of it with each payment.

Under the taxed drawdown option you do take all the tax free first and then the regular income is all taxable.

Different pension providers may support either or both options.

2) Frequency of drawdown
Taking any lump sum from a pension can be a hassle.  Depending on your provider you may have to ensure that the cash is available sitting in your pension account perhaps 2 weeks before payment is due. You probably would not want to sell investments every month to free up the cash. Some providers may automatically sell investments for you when needed, others wont.

An alternative could be to take one large payment each year. You could put it in a savings account and move a lump sum into your current account each month.

I've got both..an employer scheme I'm recieving every month..this is a sipp with about 400k in...don't want to turn it into a drawdown ATM and take all the tax free....just want about 1k per month for a few years.   I'm 62 so can't get state pension for 5 years...I'm thinking of the 1 large payment per year

Linton

gadger999 said:

Linton said:

gadger999 said:

Hiya all....I'm thinking of starting a partial encashment of my pension pot....
15k withdrawal gets me roughly 12.7 k after tax free portion and the 20% tax on remainder...I get this as a lump sum.
My question is what's the best way to transfer 1k per month into my bank account on a regular basis until money runs out....separate savings account with direct debit ????
Ifso any ideas on options
Regards...

What sort of pension do you have?  For example is it a SIPP which will be very flexible or an old employer's scheme which may not?

Two aspects on taking a steady income:

1) UFPLS or taxed drawdown
Under UFPLS you withdraw a lump sum each time (eg monthly) that is comprised of 25% tax free and 75% tax.  So you dont take the entire tax free portion first, you get some of it with each payment.

Under the taxed drawdown option you do take all the tax free first and then the regular income is all taxable.

Different pension providers may support either or both options.

2) Frequency of drawdown
Taking any lump sum from a pension can be a hassle.  Depending on your provider you may have to ensure that the cash is available sitting in your pension account perhaps 2 weeks before payment is due. You probably would not want to sell investments every month to free up the cash. Some providers may automatically sell investments for you when needed, others wont.

An alternative could be to take one large payment each year. You could put it in a savings account and move a lump sum into your current account each month.

I've got both..an employer scheme I'm recieving every month..this is a sipp with about 400k in...don't want to turn it into a drawdown ATM and take all the tax free....just want about 1k per month for a few years.   I'm 62 so can't get state pension for 5 years...I'm thinking of the 1 large payment per year

So UFPLS sounds appropriate.  I believe some SIPPs support it, some dont.  You would need to look at the documentation. The one thing you cannot do is to take any taxable income without taking  (or having taken) the corresponding tax free amount.

ian16527

gadger999 said:

Linton said:

gadger999 said:

Hiya all....I'm thinking of starting a partial encashment of my pension pot....
15k withdrawal gets me roughly 12.7 k after tax free portion and the 20% tax on remainder...I get this as a lump sum.
My question is what's the best way to transfer 1k per month into my bank account on a regular basis until money runs out....separate savings account with direct debit ????
Ifso any ideas on options
Regards...

What sort of pension do you have?  For example is it a SIPP which will be very flexible or an old employer's scheme which may not?

Two aspects on taking a steady income:

1) UFPLS or taxed drawdown
Under UFPLS you withdraw a lump sum each time (eg monthly) that is comprised of 25% tax free and 75% tax.  So you dont take the entire tax free portion first, you get some of it with each payment.

Under the taxed drawdown option you do take all the tax free first and then the regular income is all taxable.

Different pension providers may support either or both options.

2) Frequency of drawdown
Taking any lump sum from a pension can be a hassle.  Depending on your provider you may have to ensure that the cash is available sitting in your pension account perhaps 2 weeks before payment is due. You probably would not want to sell investments every month to free up the cash. Some providers may automatically sell investments for you when needed, others wont.

An alternative could be to take one large payment each year. You could put it in a savings account and move a lump sum into your current account each month.

I've got both..an employer scheme I'm recieving every month..this is a sipp with about 400k in...don't want to turn it into a drawdown ATM and take all the tax free....just want about 1k per month for a few years.   I'm 62 so can't get state pension for 5 years...I'm thinking of the 1 large payment per year

With some SIPP providers you dont need to put it all into drawdown at once. I have used Fidelity and now Vanguard, both of which have 2 separate accounts, pre retirement and drawdown when you crystalise your first amount. You only have your TFLS from how much you transfer over. 

I transfer just how much I need per annum and transfer in Feb for drawdown in April