UFPLS

[Dexydog]

Hoping RobertT may have a minute to respond if ni-one else has info.
I'm looking at retiring in April.
I have a smallish (36k) amount in Scottish Widows with a pension post 2016 , whatever acronym that is.
I would like to take 12k a year for the next 3 years so I can claim back the tax which as its under my personal allowance.
I can't do this with SW.
Would I be best transferring the whole pot into a UFPLS type pension- I know I can't then take 25% tax free but this doesn't bother me as ulimately it will all be tax free anyway, subject to claiming any tax payable at the end of each tax year.
I've contacted a couple of the big providers but they don't do UFPLS, if this is the right way to go any suggestio s for providers that might?
Also concerned any fees might eat into my accrued amount, so fees would have to be minimal
Thanks.

[RobertT]

It sounds like you're in the RMDCP.

SW don't offer the full range of pension freedoms via the RMDCP, so you will have to transfer somewhere that offers what you want.

Once transferred you basically have the option of taking up to a maximum of 25%(or a min of 0%) tax free upfront and then drawdown the rest. Or UFPLS with 25% of each withdrawal being tax free.
I'm surprised a couple of big providers say they don't offer that, I thought most did!

You may then have to claim back any tax you pay, or you may not even pay it at all!

This is what I did:

I left RM last summer after about 2 months of the tax year, then lived off savings for around 5 months(longer than planned) while I waited for the PSC to transfer my Bonusplan over to my personal pension.
Only then did I take 25% tax free from that and set the rest to drawdown, with the idea of staying within the personal tax allowance.

I was expecting to receive a net amount of pension in the first month at least and then have to claim the tax back, or tell HMRC of my new situation, who could then amend my tax code accordingly. But not only was the first payment gross, but every one since has been too.
It was all done for me!

I'm with Standard Life and found them to be very professional in terms of transferring my Bonusplan and the process of putting my pension into drawdown was straight forward.

I'd paid tax on my wages before I left and knew I was due a refund, but decided to just wait for that to take its course, instead of actively claiming it back myself.
Apparently HMRC deal with refunds between June & October for the previous tax year, which meant I got a refund about 12 months after leaving RM.

I hope that helps.

[Dexydog]

Thanks Robert.
Yes RMDCP.
I'm planning on taking 12k each year to live off until I'm 67 and draw my state pension, and claim any tax paid each year which it sounds you have done.
I actually didn't think you could still take 25% tax free once you'd transfered it.
To do this I'll also have to transfer my prudential serps pot into the same plan, as they don't allow drawdown on that particular plan either.
Both should should take me into state pension with no tax to pay.
After that I've got a good chunk saved and downsizing the house will see me out.
I'll contact standard life as that's one I hadn't asked.
If you think I might have missed a trick please let me know.
Additionally is it worth joining the newest plan in October, given I'm leaving in March next year; doesn't really seem worth it, even though I might miss a few quid in free contributions from RM.
Once again, many thanks Robert.

[RobertT]

There's absolutely nothing stopping you from taking a tax free lump sum after you transfer. All you're doing is moving from one pension to another and the same rules will apply.

Personally, I think if you're likely to be in the RMCPP for at least 3 months, it's worth joining because you get to keep RM's contributions(via transferring).

I've read posts on here from people saying it's not worth it, but I'm sure they wouldn't turn down the money if it was paid to them as part of their wages, despite probably paying more tax on it that way.

An average full time postie(£500p/w) in the RMCPP for 6 months would have about £2,500 going in, which has only cost a net of around £560.
It might be a bit of extra hassle, but personally I'd say £2k for doing nothing, which you could potentially take all tax free(depending on circumstances), is worth it.
But each to their own.

[Dexydog]

Yes, I think might as well opt into the new one and do the lump sum booster on top- I'm surprised RM are paying 3% more than now for basic pension plus another 1% for that, so that really is free money.
Just a thought, I will have to open 2 separate drawdown pensions, one for RMs and one for the Prudential serps, if I did want to keep the 25% tax free for both.

[RobertT]

Yes, I think might as well opt into the new one and do the lump sum booster on top- I'm surprised RM are paying 3% more than now for basic pension plus another 1% for that, so that really is free money.

They already pay a similar amount into the DBCBS for members of sections A, B, C & F.
The booster is a no-brainer!

Just a thought, I will have to open 2 separate drawdown pensions, one for RMs and one for the Prudential serps, if I did want to keep the 25% tax free for both.

It's your choice.
You can take 25% of each DC pension tax free, so combining them makes no difference. But having one might be easier to drawdown from.

[Dexydog]

Ah right, I thought perhaps I may have to transfer the whole amount of each one, and then take the 25% tax free from the one pot.
If I can take the tax free element from each one first, I'll do that and then combine them into one pot to drawdown from.
I'll see what each allow.
Thanks again.

[Wullie10]

I got about £3000 in my Scottish Widows AVC left after I took most as a tax free lump sum at 60 last year. I want to transfer this to a Standard Life pension to drawdown when needed. I never gave it a moments thought that a percentage of that £3000 would be a tax free lump sum. It's not a huge amount so it's not a worry. I suppose a tax free lump sum limit makes it' far easier to work out than the old life time allowance ?