Monthly drawdown v UFPLS logic

kermchem

https://forums.moneysavingexpert.com/discussion/comment/82167246#Comment_82167246

I am doing exactly as you propose with AJBell. There are no fees for drawdown itself, just the normal charges for holding assets. You can have the initial lump sum paid to external bank account, or to AJBell dealing account.

Linton

I do something completely different which has the great advantage of being automatic with no need for continual manual intervention.

All investment income comes directly from income funds in his & hers S&S ISAs (avoiding entering the higher rate tax band) which is paid out by the platform into the linked current accounts. Both II and AJBell provide this service for free though with slightly different implentations.

All income from any source (annuitees, SP, dividends/interest) goes into a near to cash pot from which all expenditure is taken.

So the only time there is manual intervention is for the very occasional rebalancing whereby long term growth investments are sold to top up the income funds when required by inflation. Since funds are usually sold just to buy other funds moving money around in a crash is less of an issue.

Mick70

thanks for replies guys

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82167263#Comment_82167263

Monthly UFPLS is not really available with any Consumer/retail platforms. Not without some hassle anyway. ( Occasionally someone on the forum will claim they do monthly UFPLS directly, so maybe things are moving on )

It is available from platforms used by financial advisors.

I believe the reasoning is that with UFPLS you are taking a lump sum, which in fact could be the whole pot. So the provider is obliged to go through a process each time, where you are warned of the risks etc. If you are working via a IFA, the provider assumes the IFA has covered all these tyes of issues with their client.

mrklaw

some offering monthly or regular drawdown will require that to be in cash at the point it’s needed. So you may end up with 12 months in cash for a while unless you want to manually sell down hits each month but that’s not very automatic then

I’m likely using FAD just to hopefully have less HMRC faff

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82167483#Comment_82167483

That is true with some of them (particularly some of the FNZ based ones). However, increasingly, auto-cash sales are becoming more commonplace. It is often possible to set the withdrawals against a certain investment. e.g. your STMM allocation. So, that works well for those using bucketing. Also if you select income units, you can use the natural income to make up the first element of the withdrawal before selling the units to make up the shortfall.

A general rule of thumb is to not let the platform dictate how you do things. You decide what you want and how to do it and then use a platform that can facilitate that. (barring any obvious or notable commercial reasons that make it worthwhile to bend your choices)

LHW99

https://forums.moneysavingexpert.com/discussion/comment/82167315#Comment_82167315

While there are a number of DIY providers now that don't charge for drawdown, there are fewer that have zero selling fees.

Tax effects depend on how you decide to access - a small amount in month 12 first, to get the tax code, then as you want to proceed should sort it. Alternatively you can reclaim overpaid tax from HMRC with the right form / adjusting income on your personal tax account, or if you already need to do a SA or are happy to wait for year end, then it gets sorted anyway.

ian16527

https://forums.moneysavingexpert.com/discussion/6686571/monthly-drawdown-v-ufpls-logic

Yes this is how it works.

I use Vanguard and do the flexi income drawdown and take a fixed amount every month, Very easy to set up and change the amount if you want to. I transfer the amount I want to use every January.

You can specify in the drawdown set up which funds you want the money once transferred to your drawdown account.

But you cannot specify which funds you want to transfer across. Vanguard will sell funds pro rata to achieve this which is my only problem as I keep 2 years of funds in a STMMF which I would like to use to fund my drawdown account but they wont do it.

A minor niggle but otherwise no issues currently

SmokeysTravels

I take a tax free lump sum each year of £4190. My provider puts £12570 into my drawdown account. I then take £1047.50 per month from this account. I leave both my pension pot and drawdown pot fully invested in the same equity fund.
I have been fortunate that the funds have done really well in the last few years - so much so that the overall value of the pension is roughly the same as when I started two years ago despite withdrawing over £33000. I understand and accept the risk of remaining invested but I have other funds I can use if it went the other way. For me, not taking the whole year in one go allows the potential for growth and avoids tax issues. I haven’t paid any tax since I started withdrawing this way. I had planned for this pension to be fully used by age 60 (in three years time) when my DB will start but as things stand I should have some left over to help bridge the next seven years before SP starts.