Retirement Planning: Schedule regular withdrawals as combination of taxable income and tax-free cash (UFPLS)

One of the changes brought in on 6 April 2015 was the introduction of a new authorised payment, with the name 'Uncrystallised Funds Pension Lump Sum' (UFPLS). An UFPLS payment can be taken direct from a Money Purchase arrangement in the form of a 'lump sum' – the lump sum comprises (ordinarily) a 25% tax-free element, with the remaining 75% being taxable at the member’s marginal rate of tax, as appropriate.

Where the scheme allows, individuals can receive their entire 'pot' of money purchase benefits as a one-off UFPLS payment, or can take a series of smaller UFPLS withdrawals, each of which will have a tax-free, and taxable element.

This guide relates specifically to the modelling of a regular series of UFPLS withdrawals. The relevant settings are illustrated below, in 3 easy steps, as follows:

Setting-up a regular UFPLS withdrawal

To schedule a pre-determined income, payable year-on-year as a series of UFPLS receipts, - either level or increasing with inflation - one should navigate to the Planned Withdrawals screen, via the left-hand menu. The relevant settings are illustrated below, in 3 easy steps:

1. Select the uncrystallised Money Purchase account

Planned_Withdrawals1.jpg

2. Specify the desired amount, and type of withdrawal

Planned_Withdrawals_UFPLS.jpg

3. Select a 'Start', and 'End' event, for when the income will commence (and terminate)

In the small Time panel, right of screen centre, we recommend selecting the 'Events' tab, after which you will designate a 'start' event (green dot), and an 'end' event (red dot), to designate the period over which the income should be paid (given sufficient funds).

Planned_Withdrawals3.jpg

 

NB: To receive a finite monetary amount (of tax-free cash), by 'phasing' the crystallisation of benefits over a pre-ordained timeframe, one would set the Crystallised Amount to '100%'. Frequency will be set to 'Phase Over x Years', with the choice of an appropriate period of time. A short guide is linked to here >>>

To return to 'Retirement Planning Options - Default Settings' click here <<<

 

Last updated 03 June 2019, Release 5.0.24