Retirement - Drawdown vs UFPLS vs Annuity

I would like to know more about tax implications with the UFPLS option. Your example stated £34000 take home from a £40000 withdrawal but what about personal allowance? Taking this into consideration, wouldn't the take home be more around £36,000?

Just want to give this channel a little praise. I am in the process of a career change and much of the information provided is of inestimable value to me. From the presentation to the time-frame of the videos. Absolutely fantastic stuff. I really, really appreciate what you are doing. x

I have a small aviva private pension of £52000 i need to take £8000 which option is better UFPLS or DRAWDOWN im 59 .
What is the best annuity at the moment?

Useful video, thank you

Brilliant video..and the second. May I please ask, if your still replying to these, .. using your £200,000 example. If I take the 25% , can I leave the remaining 75% of £150,000 in the original "Pre Retirement" pot and providers investment fund ?

Part 2 would very helpful

Is it better to take a tax free lump sum of 25% and invest it in a high interest tax free account and set up a s.o to myself rather than a full annuity option? My pension pot only is around £130k

I have two questions.
Isn’t the taxable pension income tax free for the first 12.7k ? So in the example the tax would be approximately 2.66k instead of 4k?
If I have a SIPP can I just withdraw dividends once a month via UPFLS and would that be taxed with 13.2k tax free (12.7k tax free + .5k dividend tax fee) and rest with 8.75%

Hi Pete, just came across this and found it really helpful as I'm about 2 years off retirement and just trying to get my head round this topic. one question I had though which seems unclear to me at the moment: lets say I had £100k pot and I need £10k to clear my mortgage in a year but then plan to keep working for another year and paying into my fund up to the £60k limit. I think I would move £10k from my tax free lump sum of £25k (25%) into drawdown then into my bank account. I get that bit. But then when I stop working a year after that I want to start drawing on my pension as income. How is the tax free portion calculated? as I've taken 40% of my tax free amount (£10k/£25k = 40%) is the 25% reduced by 40% which would become 15% going forwards? Ideally I wouldn't want to crystallise all of the tax free portion at the point of clearing my mortgage. Does that make sense? thanks

In the 1990s I sold pensions on the strenght that the tax free lump sum would pay off most if not all of the mortgage and leave the investor with a pension for life. Most were over a 40 year term plus, I was not alone

In the 1990s I sold pensions on the strenght that the tax free lump sum would pay off most if not all of the mortgage and leave the investor with a pension for life. Most were over a 40 year term plus, I was not alone

Pete, this was excellent, thank you so much. One dumb question: I plan to make UFPLS payments for 2 years before I need a larger tax-free lump sum - is that possible (assuming I don't exceed the 25%) many thanks!

First time here. Great explanation. UFPLS for me (age 64). Think I'll take 7% a year - and make sure I spend it. Why 7%? It's about what I reckon to get from my investments.

Hi Pete, how is the remaining 75% held in drawdown on a crystalised amount, is it in cash at a nominal interest rate, I am 100% VG Dev Wrld ETF for my sipp, and would want the potential for growth for any money not drawn, if it is classed as investments sold then option 3 sounds better ? Excellent vid as always, I watch them all, please keep up the good work !👍

Tom,

The uncrystallised pot will continue to grow as before...it is simply what is in your pension pot.


If you withdraw from the pension pot an UFPLS amount, then you are restricted forevermore to what you can contribute to the remaining pension pot in futire to the MPAA limit.


If you need money, but still want the oltion to contribute, then you take the tax free portion of a Flexible Access Drawdown, 25%, and leave the associated 75% in the FAD section.

Hi Pete, you didn't explain what the options are for us who are public servants in DB schemes. Are there any choices for us. Public Service Pensions have been a complete Shambles since 2012 and no-one seems to know what they are entitled to or when they can retire.

What about tax allowance if you retire early. Apparently you can claim the tax back on 12k per year.

Morning. Just seen a couple of your videos this morning. I’m 55 in July and keen to take my 25% lump sum to pay towards our mortgage to reduce the time scale from 6years to 3years. Without knowing our financial circumstances are you able to comment? Many thanks claire

Your numbers are wrong. I'm glad you're not my adviser!
In the UFPLS example, assuming income tax allowance of £12,570, a pensioner would pay no NI, and be taxed £3,486 on a £30k income, leaving £26,514 on top of your £10,000 tax free. Why have you given the revenue £6,000?!
And you don't really seem to make the big point about drawdown that, in your example, you could take another £12,570 free of income tax, so an annual tax free income of £22,570, leaving £17,430 crystallised and growing. Retire at 62, do that for five years and you'll have £87,150, assuming no growth, crystallised funds left to draw as income.
You still will have your income tax allowance and also hopefully be in receipt of a state pension so can still draw more from that pot free of any tax.

I'm totally lost again. If you took 40k of your 200k then why was 30k of it taxable. I thought you could take 25% tax free

Just checking that I understand this correctly. Effectively the UFPLUS option avoids the Drawdown account but you take the money in lump sums where 25% is tax free and you pay tax on the 75% whereas a Drawdown account also allows you to take the 25% lump sum but the 75% moved into drawdown is used to pay you a monthly income.

Is the 75% sum in the drawdown account fully crystallised?
Does the Drawdown account stay invested ie have the opportunity to grow or does it have to remain uncrystallised for that to happen?
Also is it possible to just take the 25% tax free lump sum and leave the 75% in the drawdown account to take at a later point in time?

Also is it possible to take UFPLUS on a monthly basis ie choose to take an income of £1000 per month of which £250 is tax free and £750 is taxable?
Then you still potentially have a very large uncrystallised pension account.

Is the 25 tfcs an annual entitlement per tax year

Great video, very informative, sadly still a bit confused but it’s me not you 👍🏻

What is MPAA and how does it affect your personal pension ?

are you limited by the scheme you’re in when you retire? eg most of us will be in work setups and not think much about the costs etc of the platform. Or can we move the total into a new scheme with better costs/investment profiles

Hi Pete, I have a question. With an annuity, you mentioned you could be entitled to a higher income if you have medical conditions. Is this only decided at the start of the policy, i.e. if you develop a medical condition during retirement, could you then become entitled to this higher income? Many kind thanks, Daniel.

Great content - What is the difference between UFPLS and just selling some stock in your SIPP?

Watched a few of your videos now Pete, very informative. My question is, what are your thoughts on a Multi Year Guaranteed Annuity set up? I have been given this option by my financial advisor for using some of my available funds I have in preparation for retirement in 2 years. Any feedback would be most welcome.

Thanks for a great explanation, I’m at that stage now where I need to do something with my pensions but it looks a minefield and navigating it is a worry

What’s your view on lifestrategy or similar funds . I’m 69 and want a simple drawdown . Many say lifestrategy is too uk biased

Excellent video, I am thinking of retiring at 55,as work has got to stressful, I will want to work in my retirement but a basic job,I have 2 schemes with a company,a final that is now closed and a normal one,I have a long time I hope before I receive state pension, I am thinking of a annuity for the small pot I have to keep me paying the bills,no mortgage etc,and what you explained has helped me thank you

I've only watched a few of your videos so far. But have learnt so much. Definitely got a new subscriber!

Draw down pension comes with varying levels of fees. So, transferring in to drawdown small amounts you would be hit with higher fees. Typically fees are related to amount such as under £250k has a higher management fee than £300, over £500k no management fee. So, drip feeds into drawdown under the fee threshold’s will cost you in higher fees until you reach the fees free threshold. UFPLS is probably a better and cheaper option. Just manage where your pension pot is invested and chosing your fund(s) depending upon risk appetite!

Good video to help with planning but can't help but feel that the reality of dealing with pension companies and inland revenue is not so simple...for example if I retire from PAYE half way through FY and take 25% from pot thinking its tax free how do I know that not actually its been accumulated with earnings ..

Morning, I have a DB pension and an AVC. Can UFPLS be applied to the AVC part like a DC pot or is a tax free drawdown handled along with the DB and applied consistently for both pots?
2. My wife is in an NHS DB pension and I was wondering if it would be be better to start a separate DC scheme or start an AVC with NHS? What is most flexible?

Hi Pete – I’ve been trying to work out some things relative to pensions for a while but not got as far as I would have liked in my understanding of options. However, after happening upon, and then binge-watching a load of your videos, most of what I was trying to understand has now been clarified – so many thanks for that. I know, most people are binge-watching Netflix, not pension videos, but hey-ho… needs must… :-)
I appreciate your clear coverage and content, but one area I still don’t understand is – what happens to the uncrystallised pot when taking slices off it (through the various methods)? You explain everything I need to know but then I am waiting to see what your opinions / the options are on the remaining pot – but that never seems to come up.
This is the: ‘asking for a friend’ bit 😊. Let’s say someone is 57 years old – wants to consider options on their pension today (as per all your videos I’ve digested thus far) – but at the same time has no realistic intention of leaving their employer until 65 years old. What happens to the uncrystallised pot during that interim period? I presume it continues to be contributed to and matched by the employer during these additional 8 years working – but what are the implications on taxation or moving more money during that interim period? I.e., could an UFPLS request be made – and then nothing further done to the pot for 8 years?
Sorry if that doesn’t make sense – but I’ve watched about a dozen videos now – and several times you’ve got so close to what I thought would cover this eventuality and then it never happens.
Thanks again for the excellent, clear, concise, and informative videos. Cheers!

If you take the 25% tax free cash from the pre-retirement pot. Does the rest of the pot have to more into drawdown and trigger MPAA? Or can it be left in pre-retirement?

Hello I have contributed into a D.C and at the moment I was planning on retiring soon I have found that although I have contributed 184690 to date the balance in my pot is only 193586 ? Tge pension company defaulted me into retirement fund and a cash fund why has my pot grown by very little? What has gone wrong ?

In your UFPLS example there was no mention of allowances. Can you please clarify that if you take full 25% tax free cash at 55 the first ~£12k of whats left is tax free ? I’m 51 and have approx £1m fund and being born in 1972 straddle the 55/57 age to access 25% tax free pot. To maximise my options and de-risk a different govt changing pension rules my pension coach is advising to take max cash to maximise my options. However just want to be sure if I do this is ANY amount then taxable or just that over 12k ?

I see that a fixed term annuity was not covered. Do you have information on these as another possible option. Thanks in advance .

As a visual learner, this was amazing. Thank you

Interesting video Pete, you touched on an example that's exactly my position, small pension at 60, more at 65 then state at 67 👍

Would I have to take all of my tax free money at once, and is there any time limits for taking it. Thanks.

Very good video.
What if you draw down the whole amount.. Take your tax free lump sum, and then put the rest into some sort of trust fund that gives you access to a tax free yearly amount.?

thank you for your video. my understanding on annunity was , that you will alway get incoming through out your retirement from your pot if it is CPI

Very useful video and would like a follow up detailing the tax implications of UFPL vs drawdown.

If you only wanted to withdraw £16,760 per annum. Why would you do flexi drawdown instead of UFPLS? It seems UFPLS is the simplest and most hassle free option?