Flexible drawdown

muswellblue

Hi, 

if you have flexible pension drawdown can you take your tax free lump sum spread over a number of years? so for example you could take your personal allowance of £12570/year and say top that up to £15000 for that year using part of your tax free lump sum, so basically not having to pay tax for that year. Or have I got this totally wrong? 

dunstonh

if you have flexible pension drawdown can you take your tax free lump sum spread over a number of years?

yes

so for example you could take your personal allowance of £12570/year and say top that up to £15000 for that year using part of your tax free lump sum, so basically not having to pay tax for that year. 

You would do a UFPLS totalling £16,760 a year. 

rjmachin

dunstonh said:

if you have flexible pension drawdown can you take your tax free lump sum spread over a number of years?

yes

so for example you could take your personal allowance of £12570/year and say top that up to £15000 for that year using part of your tax free lump sum, so basically not having to pay tax for that year. 

You would do a UFPLS totalling £16,760 a year. 

Am I correct that currently (for future reference, though i'm 13 years away and will no doubt change), you could "crystalise" £16,760, take the tax free portion of that, then take small monthly amounts from the crystalised pot of around £1000 per month?   Meaning just some admin once per year and then getting automated payments for the rest of the year?

SVaz

You don’t have to do ufpls,   You can take a tax free lump sum up front then draw £1047.50 per month.   Saves faffing around reclaiming tax.

dunstonh

Am I correct that currently (for future reference, though i'm 13 years away and will no doubt change), you could "crystalise" £16,760, take the tax free portion of that, then take small monthly amounts from the crystalised pot of around £1000 per month?  

Yes.  That is known as UFPLS.  You can phase UFPLS too. You don't need to take that 25% up front.  So, the whole £16,760 annual can be taken monthly

You don’t have to do ufpls,   You can take a tax free lump sum up front then draw £1047.50 per month.   Saves faffing around reclaiming tax.

If you dont need any extra tax free cash up front then why take it?

SVaz

Because you have to, to get the required £16700.  

Afaik,  nobody does monthly ufpls

dunstonh

SVaz said:

Because you have to, to get the required £16700.  

Afaik,  nobody does monthly ufpls

Of all the options, I do more monthly UFPLS than any other method.   I don't believe there is a single intermediary provider/platform that doesn't offer that method.    It is more limited on the DIY side.

However, the op could do a single UFPLS annually.

squirrelpie

dunstonh said:

Am I correct that currently (for future reference, though i'm 13 years away and will no doubt change), you could "crystalise" £16,760, take the tax free portion of that, then take small monthly amounts from the crystalised pot of around £1000 per month?  

Yes.  That is known as UFPLS.  You can phase UFPLS too. You don't need to take that 25% up front.  So, the whole £16,760 annual can be taken monthly

That may be correct for intermediary platforms, but not for at least some (most? all?) retail platforms.

You can't phase UFPLS with them; it's a single transaction.

The arrangement @rjmachin proposes sounds closest to what I do, which HL call 'flexible drawdown'. I crystallise an amount once year, and take the tax free cash. Then I arrange to have the crystallised but taxable money paid to me in installments every month.

german_keeper

SVaz said:

Because you have to, to get the required £16700.  

Afaik,  nobody does monthly ufpls

My wife does monthly UFPLS with NEST. I don't think there is a way of setting it up on a regular basis but I log on to her account once a month and request a payment of £1256 (she has given me the 10% marriage allowance) and it takes about 2 minutes. They allow you to take regular lump sums with a maximum of 1 per month. Not sure if this would officially be classed as UFPLS but it's the same result.

redpete

squirrelpie said:

dunstonh said:

Am I correct that currently (for future reference, though i'm 13 years away and will no doubt change), you could "crystalise" £16,760, take the tax free portion of that, then take small monthly amounts from the crystalised pot of around £1000 per month?  

Yes.  That is known as UFPLS.  You can phase UFPLS too. You don't need to take that 25% up front.  So, the whole £16,760 annual can be taken monthly

That may be correct for intermediary platforms, but not for at least some (most? all?) retail platforms.

You can't phase UFPLS with them; it's a single transaction.

The arrangement @rjmachin proposes sounds closest to what I do, which HL call 'flexible drawdown'. I crystallise an amount once year, and take the tax free cash. Then I arrange to have the crystallised but taxable money paid to me in installments every month.

I make UFPLS withdrawals from my ii SIPP several times a year - synchronised to maturing gilts I have in a 5 yr gilt ladder.

ii don't support setting up automatic UFPLS withdrawals on a monthly basis, each has to be done on an individual basis, and I wouldn't want to have to go through the process once a month.

muswellblue

Hi,

So I have a legal and general worksave pension, do they allow UFPLS withdrawals?