HL SIPP - Inundated by Drawdowns?

poseidon1

artyboy said:

dunstonh said:

artyboy said:

dunstonh said:

 My request was to take about a months income out, and I was planning to do that each and every month.

That is not the ideal way to do it.  Unfortunately, most DIY platforms do not support monthly UFPLS, whereas most intermediary platforms do.   Some of the intermediary platforms have a DIY offering and offer regular UFPLS.  So, a provider change may be better for you.

I called HL to find out why given that they processed this much more quickly before. I was told that they have been inundated by drawdown requests because everyone is petrified that they are going to lose value in their SIPP due to tax changes in the budget. And yes, it is true that certain tax changes could mean people losing tens of thousands in real value if the happen. I dont know what Labour will do, I just wanted to drawdown my small monthly income, but I now appear to be stuck behind a great big queue of people who are panicking (rightly or wrongly). 

All providers are running slow at the moment.  Some more than others.  And yes, it is down to people scared of losing the 25% even though the Treasury have confirmed it is not changing.

This is a big problem for me, because I need to have this income. According to HL, they say that they will process the request with 20 days. I didnt realise that was the lead time, my first experience of the process was that it took a couple of days and was no big deal. Now it is a big deal because if that drawdown step doesnt happen before the 17th I will have no income for December and Christmas.

This is poor financial planning on your part.    Drawdown transactions can take as little as 20 minutes or as long as a month.  You should not rely on ad hoc withdrawals each month without having a cash float available.

And do you think that it is right that HL has a drawdown process that can take 2 months to complete under these circumstance? 

2 months would not be considered unreasonable for an ad-hoc drawdown during peak times.  Although up to 1 month is more typical.   Not all providers have a daily payroll.   Some are limited to as little as one per month (less common nowadays).

Most providers are talking about a week or two extra delay.    Some are handling it within capacity but it tends to be the more modern software providers that are.  I just keyed one in and the money will be there within the hour 

March is another month when delays occur.

Did I miss the memo on that @dunstonh - I've been trying to keep up with all the speculation and counter speculation, but I didn't see anything definitive from the Treasury that ruled out TFLS changes?

Last Friday, a Treasury spokesman confirmed it was not being considered.    First reported in the Times I believe.  Other media outlets have been slow to follow (possibly to allow them to continue to scaremonger to sell copies)

Thanks. So we won't be seeing it in the Telegraph any time soon then 

Ironically reported by the Telegraph yesterday - see below

https://www.telegraph.co.uk/money/pensions/news/treasury-rules-out-pensions-lump-sum-raid/#:~:text=Giddens/PA Wire-,Mattie Brignal Senior Money Reporter,limit to just £40,000.

I heard the report on Times radio last Saturday, but surprised the usual news outlets took awhile to formally publish.

ColdIron

eastcorkram said:

In the case of HL, is it possible or not, to set up a monthly withdrawal from a drawdown pot, providing that there's a sufficient cash balance?
I'll be needing to do this early next year. 

Yes. It's the whole point of drawdown. It can be monthly, quarterly etc

singhini

Apparently i need to write something (Body is 9 characters too short)

penners324

leicestersq said:

SVaz,

Alas my drawdown pot is empty. The hurdle I am having trouble jumping is getting money from the SIPP into the drawdown pot. I want to leave my money in the SIPP until just before I need it because of the tax wrapper protections.

If I had foreseen my current predicament, maybe I would have drawndown a larger amount and taken the hit from not having the asset in a tax wrapper. That said if you had told me that the whole process from SIPP to bank account would take possibly 2 months just a month ago, I wouldnt have believed you.

I think youve misunderstood what pension drawdown is. The whole gets moved into a drawdown pot, it's still in the pension wrapper.

leicestersq

penners324 said:

leicestersq said:

SVaz,

Alas my drawdown pot is empty. The hurdle I am having trouble jumping is getting money from the SIPP into the drawdown pot. I want to leave my money in the SIPP until just before I need it because of the tax wrapper protections.

If I had foreseen my current predicament, maybe I would have drawndown a larger amount and taken the hit from not having the asset in a tax wrapper. That said if you had told me that the whole process from SIPP to bank account would take possibly 2 months just a month ago, I wouldnt have believed you.

I think youve misunderstood what pension drawdown is. The whole gets moved into a drawdown pot, it's still in the pension wrapper.

The amount I am trying to draw out is the amount I want to be paid into my bank account (less tax). That means taking it out of the tax wrapper. This intermediate state of 3/4 of the drawdown going to a drawdown account isnt quite what I want. I would rather have UFPLS (I think it is called that) but HL dont offer a way of doing that online, nor a way of setting up a regular UFPLS payment. Also, having to send post each and every month to drawdown is an outmoded way of doing things.

Maybe I will switch to using UFPLS in the future, but as I have just started with my 'retirement' I want to give this other method a chance. As I mentioned above, it pretty much worked with the first couple of payments. It is just this delay due to this tax panic which has caused me a problem.

I was also hoping to provoke some discussion on the panic itself. I was pleased to read some of the posts above which indicate that people are panicking like Corporal Jones over nothing. Those people would have taken their money outside of a tax wrapper and can now only use ISAs to shelter that money again, but only at a rate limited to £20k per year. Until that process is complete, their capital and income generated from it is subject to a very sharp tax.

Albermarle

leicestersq said:

penners324 said:

leicestersq said:

SVaz,

Alas my drawdown pot is empty. The hurdle I am having trouble jumping is getting money from the SIPP into the drawdown pot. I want to leave my money in the SIPP until just before I need it because of the tax wrapper protections.

If I had foreseen my current predicament, maybe I would have drawndown a larger amount and taken the hit from not having the asset in a tax wrapper. That said if you had told me that the whole process from SIPP to bank account would take possibly 2 months just a month ago, I wouldnt have believed you.

I think youve misunderstood what pension drawdown is. The whole gets moved into a drawdown pot, it's still in the pension wrapper.

The amount I am trying to draw out is the amount I want to be paid into my bank account (less tax). That means taking it out of the tax wrapper. This intermediate state of 3/4 of the drawdown going to a drawdown account isnt quite what I want. I would rather have UFPLS (I think it is called that) but HL dont offer a way of doing that online, nor a way of setting up a regular UFPLS payment. Also, having to send post each and every month to drawdown is an outmoded way of doing things.

Maybe I will switch to using UFPLS in the future, but as I have just started with my 'retirement' I want to give this other method a chance. As I mentioned above, it pretty much worked with the first couple of payments. It is just this delay due to this tax panic which has caused me a problem.

I was also hoping to provoke some discussion on the panic itself. I was pleased to read some of the posts above which indicate that people are panicking like Corporal Jones over nothing. Those people would have taken their money outside of a tax wrapper and can now only use ISAs to shelter that money again, but only at a rate limited to £20k per year. Until that process is complete, their capital and income generated from it is subject to a very sharp tax.

Often people will take one UFPLS a year and put it in an easy access savings account . Then withdraw from that as and when needed.

ian16527

leicestersq said:

penners324 said:

leicestersq said:

SVaz,

Alas my drawdown pot is empty. The hurdle I am having trouble jumping is getting money from the SIPP into the drawdown pot. I want to leave my money in the SIPP until just before I need it because of the tax wrapper protections.

If I had foreseen my current predicament, maybe I would have drawndown a larger amount and taken the hit from not having the asset in a tax wrapper. That said if you had told me that the whole process from SIPP to bank account would take possibly 2 months just a month ago, I wouldnt have believed you.

I think youve misunderstood what pension drawdown is. The whole gets moved into a drawdown pot, it's still in the pension wrapper.

The amount I am trying to draw out is the amount I want to be paid into my bank account (less tax). That means taking it out of the tax wrapper. This intermediate state of 3/4 of the drawdown going to a drawdown account isnt quite what I want. I would rather have UFPLS (I think it is called that) but HL dont offer a way of doing that online, nor a way of setting up a regular UFPLS payment. Also, having to send post each and every month to drawdown is an outmoded way of doing things.

Maybe I will switch to using UFPLS in the future, but as I have just started with my 'retirement' I want to give this other method a chance. As I mentioned above, it pretty much worked with the first couple of payments. It is just this delay due to this tax panic which has caused me a problem.

I was also hoping to provoke some discussion on the panic itself. I was pleased to read some of the posts above which indicate that people are panicking like Corporal Jones over nothing. Those people would have taken their money outside of a tax wrapper and can now only use ISAs to shelter that money again, but only at a rate limited to £20k per year. Until that process is complete, their capital and income generated from it is subject to a very sharp tax.

You dont need to move all your funds to drawdown in one go. Doing a UFPLS every month is time consuming.

You just move what income you need for the following year from your investment account into your drawdown account, I do this in January for drawdown from April.

So you do one UFPLS per annum, then they pay you the 25% TFLS and you request what monthly income you require from the drawdown account. The rest of your SIPP stays in the investment account.

You can use the TFLS as monthly income, as I put it into a savings account and drawdown a monthly amount if needed.

Tax wise, not sure what other income you have, but I allot my fixed income DB amounts to a fixed tax code with HMRC so  I dont pay tax on these. Then I just pay any tax on my SIPP drawdown amount. 

When I first calculated drawdown amounts I included the Tax free element every month until I found out they dont work it this way. Its too much trouble having to go through the system checks and paperwork every month - bad enough once a year

SVaz

One UFPLS means taking the Whole yearly amount in one go,  25% tax free and 75% taxable - there is no ‘monthly income’. 

You are referring to Flexi access drawdown where you take the tax free amount up front then draw monthly income from the crystallised bit.  

My Wife prefers FAD because she doesn’t have to wait for a tax refund like she would with UFPLS.  She crystallises £5600, takes £1400 tax free cash then £350 a month income, which uses her spare personal allowance. 

Jerben

I drawdown in a similar way to ian16527.

Once a year I ‘move’ £16760 out of the HL SIPP by filling in an online form. 

(It takes about 10 minutes)
After about 2 weeks they send me the TFLS, (ie £4190.00)
That leaves £12570.00 in the ‘Drawdown’ pot.
I can easily set up that to pay me £1047.50 per month.
(It’s easy to adjust the drawdown amount online if required).

Repeat the above every 12 months…

OP - I do this once a year, it’s quite easy.
(I do this with £16760 so as not to pay any tax as I have no other salary or pension income, but you can choose another amount, it works just the same, -you may be taxed as per your individual situation).
All The above monies are still within a ‘pension wrapper’ until they arrive in my bank account.
I have never had to ring HL or post anything to them.

ian16527

SVaz said:

One UFPLS means taking the Whole yearly amount in one go,  25% tax free and 75% taxable - there is no ‘monthly income’. 

You are referring to Flexi access drawdown where you take the tax free amount up front then draw monthly income from the crystallised bit.  

My Wife prefers FAD because she doesn’t have to wait for a tax refund like she would with UFPLS.  She crystallises £5600, takes £1400 tax free cash then £350 a month income, which uses her spare personal allowance. 

Yes sorry for my terminology mix up.

 So if its a UFPLS, then both the TFLS and remaining 75% would be paid out together to the customers nominated bank account. 
 But in the OP's first post he intimates that he has to request the 75% to be paid out from his drawdown account

"I noticed that this request when it was sent to HL was dealt with pretty quickly, within a day or two. I saw that a quarter of the money (tax free) appeared in my bank account and the remainder went to a drawdown account. I then found out that in order to get the full amount you withdraw from the SIPP into your bank, you need to put in another request to withdraw the money in the drawdown account to your bank."

So is this normal for UFPLS with HL