Flexi Access Drawdown
Anyone over minimum pension age can designate funds into flexi access drawdown as long as it is coming from uncrystalised (or unused) DC pension funds or it is held in capped drawdown already.
3 ways to move into flexi access drawdown:
- designate uncrystalised (or unused) funds
- Elect to move from capped to flexi access or take more than 150% of the basis amount. This did not trigger the MPAA rules as the member has not flexibly accessed their benefits.
- In flexible drawdown pre 6th April 2015 which automatically moved to flexi access drawdown on 6th April 2015 which also triggered the MPAA rules but not a BCE event.
Question - Use Your Note Taker To Jot Down Ideas / Calculations
Daniel, who is 58, has a personal pension fund valued at £280,000. He would like to take a gross withdrawal of £20,000 for 2018/19. He is considering various ways of achieving this payment. Which one of the options shown below would not require him to designate funds to flexi-access drawdown?
a) Crystallising £80,000 and taking a tax-free lump sum of £20,000 only.
b) Crystallising £20,000 and taking £5,000 as a tax-free lump sum and the balance of £15,000 as income.
c) Crystallising £40,000 and taking £10,000 as a tax free lump sum and the £10,000 of the balance as income.
d) Crystallising £60,000 and taking £15,000 as tax-free lump sum and £5,000 of the balance as income.
B)
If Daniel crystallises £20,000 and takes £5,000 as a tax-free lump sum and the balance of £15,000 as income then the whole amount crystallised will have been paid to him and therefore could be made as an UFPLS. In all other cases some of the funds remain undrawn and so must be placed into a flexi-access drawdown fund.