Tax code - drawdown across separate pots - unforeseen consequences of higher/imbalanced income

gm0

I am reviewing my drawdown approaching 4 years into my plan.  So very short timeframe in investment terms.  A normal rebalancing, income setting activity.  

I ALSO wish to reduce the depletion rate of assets/savings outside pension with a view to using some of that differently family need and side eye to the revised 2027 rules.  

No longer on a previously sensible and also extremely rough and ready curve to spend pension last.

So this requires more drawdown income from next year and particularly during the bridge years remaining to SP.  Reducing the savings dip and keeping that money available.  

The scenario is three pension pots. 2 with income active.  One not.

The "not touched" (uncrystallised) pension does not support drawdown. 

Current 0 income on that pot.  
That needs to move to a new platform to be touched. 
For all pots to be dipped evenly.  

But that doesn't *seem* to be necessary at all

So at *my* level of knowledge. 

- Income tax is the same

I cannot think of any problems with just upping the drawdown on the already "in drawdown" sections to a higher % and just continuing to ignore the uncrystallised pot.   Left invested.

All pots are above their CPI indexed start value.  So it is no worse than me starting the pension "now" with the new WR.  Albeit drawdown sustainability theology very much dislikes applying year zero after positive sequence for more income.  WR an outcome variable after initial setting.

Untouched is the longest term investment, the most aggressive and to date successful of the portfolio - 100% global equities ethical lite. In other conditions it would surely dip by the most.
Insured fund. Fund cost 0.06%. Platform cost 0.  I am minded to keep it not move it to a new or existing SIPP.  If *all* the move adds is an increased fund cost (to say 0.12% for global equities - VHVG say) and a tidier "more symmetrical" setup. 

I am already treating the untouched one as part of the overall portfolio from a "speculative risk" taken perspective. The nature of that investment is factored in to other choices made elsewhere.

From a drawdown sustainability point of view it appears fungible.  

The drawdown rate on the pots taking income be higher vs their own value 

The untouched one is still part of the overall asset picture (denominator - total income/assets)

it doesn't matter which "pension" pot it comes from.  i.e. drawing gross 10 10 10 across three would be the same as drawing 0 15 15.   No more or less sustainable

30k Gross income = same income tax (and whatever the chancellor does to pensions in payment and fiscal drag of tax thresholds and rates and NI over a few years)

IHT differences appear likely to be limited to any age related limits (75?) and possibly - nuances about uncrystallised vs crystallised - which I do not fully know the details of - there was something historically on uncrystallised (mildly beneficial I seem to dimly recall).  Uncertain as to the rules now. 

No CGT - because pensions

Other issues:

Mix of capital depletion. There is clearly slightly less "crystallised for income funds" left. Because higher income there.  And slightly more uncrystallised funds after doing this for a few years.  

Returns dependent by portfolio section.  But I cannot see any other issues with it.  As at any point I can choose to merge the one in with the other.  Making uncrystallised - crystallised. Or off to an annuity.

Is there any loss of flexibility?

If I move it to a SIPP now - I can still do a "partial" for an annuity fixed term or lifetime (Correct?) 

Or I can do an OMO from where it is now uncrystallised for an annuity of choice (Confident this is true).

Or I can move it into drawdown alongside or in with one of the others later. And consolidate drawdown platforms ultimately for simplicity for spouse/executor.  

Particularly given new IHT rules and obligations on executor will now likely make a multiple pots scheme more painful.  One per heir perhaps for residuals.  Or just one.

So I don't see any current "gotchas" with just leaving things alone.  
And doing a 0 15 15 version

My current understanding of the rules then is that in the general case (regardless of pot size above small pots rules).  Retaining and maximising the uncrystallised section is optimal (for generating extra TFC below LSA limit). So with phased FAD or use of UFPLS the aproach.  
puts crystallised drawdown income up. And leaves uncrystallised as is where it can. 

And at the other break point (LSA limits after protection considerations so where FAD has exhausted TFC. So TFC growth is irrelevant.  It doesn't matter either way.  Can do either one. It's just convenience and any investment flexibility and cost considerations.

Am I right about this.  

Have I missed anything in the maze of pensions tax code that will restrict or bite me?

hara____

It's a little hard to follow the entire post, but if you go back to basics:

- as you say, you should look at all 3 pots combined to make sure you're content with your total asset allocation 

- crystallised versus uncrystallised funds is (I think) the most important factor when it comes to which assets types you choose to hold where (more important than which account those assets are in) because all else equal you want the growth assets to increase your uncrystallised total

- and from a tax point of view: as with most people, you want a clear plan for when you will draw from the crystallised and uncrystallised elements, to manage your income tax

Maybe I've missed something, but if you do well against those three points, you shouldn't go too far wrong.

GunJack

It sounds like you've got more assets than you know what to do with, and seem to want to make things more complex than needs be.....simplify before you start losing your marbles!! 🤣🤣