Wealthify Drawdown - application process

GenX0212

Mrs GenX is attempting to drawdown from her Wealthify SIPP.

In order to start drawdown you first have to complete a paper/pdf form and upload it back to Wealthify. The form provides options for:

A) A tax free PCLS with options to drawdown later

B) A lump sum now of 25% tax free and the remain 75% taxed

C) A defined gross income - The form then goes on to ask how much and what frequency (one-off, annual, quarterly or monthly) you want.

We completed the form choosing the defined gross income option with a £500 monthly drawdown but Wealthify have then responded with the following vague message:

"Our custodian has indicated to me that the way your pension is structured Income is not a valid withdrawal option for you. To enable us to action, a crystallization event will be required if the client is looking to take income.Pension Wise offer a free phone call - we can help you book a call in with them if you would like? Please let us know if you would like us to arrange that for you."

Fully understand that a crystallisation event needs to occur in order to take money from the pension but unclear as to how Wealthify want you to complete the forms. We have previously completed the online PensionWise assessment and don't see how having another appointment with them would help.

We don't want to take a PCLS - option 1

We had read option 2 as being a one-off event rather than a regular payment. It says "a lump sum now"

We had read option 3 as being what was desired i.e. a regular monthly drawdown and assumed it would comprise both the 25% tax free and the 75% taxable and that there would be an implicit crystallisation event by Wealthify?

The form clearly states "tick one box only"

Has anyone gone through this process and able to offer advice - or else anyone else have any thoughts? Thanks.

NoMore

They are using the same form for everyone, but I think option 3 only applies once you have created a crystallised portion by using option 1. This is why it says option 1 allows you to setup income at a later date, which would be by option 3.

GenX0212

https://forums.moneysavingexpert.com/discussion/comment/81973643#Comment_81973643

Many thanks, I can sort of see that now but the form instructions are far from clear.

So tick Option 1), with a £0 PCLS specified in section 4.2 and the £500 monthly specified in section 4.3 ; and completely ignore the Option 3 box.

You would have thought they would give you a little bit more help rather than just "computer says no"..

NoMore

Why do you not want to take the tax free cash, if you don't take it at crystallisation, you lose the chance for that particular crystallisation.

So in your wife's case, you want £500 a month, that's £6k for the year. Crystallise 6k, 25% of which you get right away tax free (£1500) leaving £4500 crystallised that you draw £500 from each month, possibly after the 3rd month after using the tax free cash first.

GenX0212

What we want is a regular monthly income of £500 (which would be £125 tax free and £375 taxable). We dont need an explicit PCLS

NoMore

Ok so your wanting to use UFPLS (25% of each withdrawal, 75% taxable). Option1 is flexi access drawdown, which is you crystallise and get 25% tax free and can draw from the left over crystallised as and when, with all drawdowns from this pot are taxable.

It doesn't look like Wealthily offers regular automatic UFPLS, only one off UFPLS (option 2), automatic regular UFPLS is a rare thing, see this thread :

UFPLS regular automatic monthly payment possible? — MoneySavingExpert Forum

GenX0212

https://forums.moneysavingexpert.com/discussion/comment/81973678#Comment_81973678

Understand what you are saying, just not understanding the forms. There doesn't seem to be any option for taking the monthly payment only from the 3rd month onwards.

So are you saying we need to go with:

tick Option 1), with a £1500 PCLS specified in section 4.2 and then £375 monthly specified in section 4.3

Mrs GenX was hoping to keep the notion of just being monthly paid rather than have a lump sum and monthly payment but if that's the only way to do it then fair enough.

Albermarle

These newer players seem more interested when you are accumulating in the pension, rather than offering a fully flexible drawdown/withdrawal service ( which is more costly to operate).

GenX0212

https://forums.moneysavingexpert.com/discussion/comment/81973696#Comment_81973696

The website gives the impression that it does but maybe the devil is in the details?

From Wealthify's website:

"Flexi access drawdown:

A flexi-access drawdown provides a flexible way to access your defined contribution pension.

This approach gives you full control over how much income you take and when. You can draw a regular income, occasional lump sums, or leave your pot untouched for periods of time, depending on your needs."

NoMore

You may be better talking to wealthify directly to explain what you want to do and what they advise they can but it looks like you can either:

Every month fill this form in for a £500 UFPLS payment using option 2.

or

First Month, use Option 1 to crystallise 6k, get the 1500k tax free, then fill in the form on month 3 stating you want a £500 monthly withdrawal using option 3.

That's the options if you insist on a monthly payment direct from the pension.

Personally, I would consider taking a one off UFPLS withdrawal of 6k and just set up a standing order for £500 from wherever you store it.