Note that the default settings, relating to money purchase and drawdown benefits, have changed (as of September 2015), such that benefits will now be left un-crystallised (within the money purchase wrapper) for as long as possible, to be used only on an As Needed basis. As a consequence, the software now defaults to taking any withdrawals as (a series of) 'Uncrystallised Funds Pension Lump Sum' (UFPLS) withdrawals, sufficient only to meet any outstanding expenses.
This instruction is intended, by contrast, for situations where one intends to crystallise 100% of the money purchase benefits, releasing all available tax-free cash in the process, with the remaining 'taxable' portion being deposited into 'Flexi-Access Drawdown' (FAD), to be used as and when needed (if at all).
Step One: Withdraw all available tax-free cash
In the Money Purchase screen, select the relevant account, in the Ledger, on the right. Under Withdrawals & Annuity, select the option Crystallisation of Money Purchase.
As illustrated above:
- Set Crystallised Amount to '100% of Account Value'.
- Set Lump Sum to '25%'. It follows that the remaining 75% will be credited to the Flexi-Access Drawdown account.
- Set Frequency to 'One Time'.
When you are done, hit OK and select the option Income from Drawdown Pension
Taxable Drawdown Income:
Having looked at the crystallization settings, it remains to look at the 'income' side of the equation. The software's default assumptions are:
- Crystallised benefits that are not withdrawn immediately as a ‘lump sum’, will be deposited into Flexi-Access Drawdown.
- For each Money Purchase account, the software will create an empty drawdown (Unsecured Pension, or USP) account, into which taxable benefits can be deposited.
- From the FAD account, the default assumption is that taxable benefits will be withdrawn only on an ‘as needed’ basis (as illustrated below).
Step Two: Set taxable (drawdown) income to 'None'.
In the Pensions > Money Purchase screen, open Withdrawals & Annuity > Income from Drawdown Pension, as shown below:
As illustrated, one can set the Yearly Drawdown Amount to 'None'. This will have the effect of ensuring that pension benefits are preserved, i.e. remain unused, for the remainder of the plan, for the benefit of one's intended beneficiaries.
As an alternative, however, one could simply add a later event (i.e. at some point after the individual's Retirement), to the Timeline, then select this newly-added event from the ('Start Income') dropdown menu, shown in the illustration. From that event, one can specify any level of income from the options available, e.g. 'As Needed'.
Finally, note that, should it be necessary - subsequently - to amend (increase/decrease) the level of taxable income that is being taken, for example, to move from a predetermined level of taxable income, to an 'as needed' basis, this can scheduled by using the Step-Up/Step-Down facility, located in the Pensions > Drawdown Pension screen, under Advanced Settings. Further details on how to do this can be found here.
Last updated 11 November 2015, Release 4.0.28
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