UFPLS Risk Warnings

Qyburn

Whenever I take a UFPLS withdrawal there's a form with a few straightforward questions, but also a few trick questions where it's not really obvious what they're expecting. This year one was ..

"Will the money you are taking from your pension fund be your sole or main source of wealth 

in retirement?" 

I am a bit surprised that answering "Yes" triggers a risk warning and temporary block on the transaction. Isn't that the intended aim of a pension, to provide ".. sole or main source of wealth 

in retirement"? 

I strongly suspect, based on similar questions in the past, that "No" would also had the same effect 

Pat38493

Qyburn said:

Whenever I take a UFPLS withdrawal there's a form with a few straightforward questions, but also a few trick questions where it's not really obvious what they're expecting. This year one was ..

"Will the money you are taking from your pension fund be your sole or main source of wealth 

in retirement?" 

I am a bit surprised that answering "Yes" triggers a risk warning and temporary block on the transaction. Isn't that the intended aim of a pension, to provide ".. sole or main source of wealth 

in retirement"? 

I strongly suspect, based on similar questions in the past, that "No" would also had the same effect 

I expect that by "your pension fund" they mean "this pension fund".  I think I have seen prior posts where people found that they were blocked if they were taking out money at an "unsustainable rate" and then had to jump through more hoops to get the money  - if I am asked questions like this I would say no to imply that I have other pensions or other sources of income (which in my case is true).

dunstonh

Different providers will have different intrepretions and methods.....

"Will the money you are taking from your pension fund be your sole or main source of wealth 
in retirement?" 
I am a bit surprised that answering "Yes" triggers a risk warning and temporary block on the transaction. Isn't that the intended aim of a pension, to provide ".. sole or main source of wealth in retirement"? 

The majority of people drawing from a pension will do so on a monthly basis (either regular UFPLS or regular drawdown).  Doing an ad-hoc lump sum may be used by some people but not the majority.  So, a basic flow chart style risk warning process will likely fall down at that point as it thinks you are drawing money from your pension for lump sum basis rather than income basis.

Qyburn

Pat38493 said:

... if I am asked questions like this I would say no to imply that I have other pensions or other sources of income (which in my case is true).

A previous year I did try saying "no" not to this exact question but something similar like asking if I had other funds. That also triggered the risk warning and block, on the basis that I should be using these "other funds" instead, which incidentally would have meant wasting that year's personal allowance.

Qyburn

dunstonh said:

The majority of people drawing from a pension will do so on a monthly basis (either regular UFPLS or regular drawdown).  Doing an ad-hoc lump sum may be used by some people but not the majority.  So, a basic flow chart style risk warning process will likely fall down at that point as it thinks you are drawing money from your pension for lump sum basis rather than income basis.

Thanks, that reminds me to look and see if they now support monthly UFPLS. They didn't in the past.

So far my UFPLS lump sums have been tailored to match otherwise unused personal allowance towards the end of the current tax year, while drawing money to spend in the next.That consideration will come to and end at some point soon with the SP using the allowance. So I could change to monthly if it's available.  What I don't want to do is take out all the tax free if that's the only way to get monthly income.

phlebas192

Qyburn said:

dunstonh said:

The majority of people drawing from a pension will do so on a monthly basis (either regular UFPLS or regular drawdown).  Doing an ad-hoc lump sum may be used by some people but not the majority.  So, a basic flow chart style risk warning process will likely fall down at that point as it thinks you are drawing money from your pension for lump sum basis rather than income basis.

Thanks, that reminds me to look and see if they now support monthly UFPLS. They didn't in the past.

So far my UFPLS lump sums have been tailored to match otherwise unused personal allowance towards the end of the current tax year, while drawing money to spend in the next.That consideration will come to and end at some point soon with the SP using the allowance. So I could change to monthly if it's available.  What I don't want to do is take out all the tax free if that's the only way to get monthly income.

It will depend on whether your provider offers the option, but you could do a partial crystallisation, take the TFLS and then withdraw the taxable crystallised part monthly. eg crystallise £16,000 taking the £4,000 TFLS and then taking £1,000 per month of taxable income for the next 12 months. The remainder of your pot will remain uncrystallised and the process can be repeated as necessary. The major DIY platforms should all allow this even though they are unlikely to offer monthy UFPLS.

Storcko14

I'm pretty sure when I took a sizeable UFPLS (ii) 3 or 4 months ago, that I answered 'no' and had no issues at all.  Certainly no suggestion that I should use other funds.