If you have a SIPP, is there any real world difference between the "pension pot" (with UFPLS) and "drawdown account" (with flexi-access drawdown)? Presumably the undrawn monies remain invested in exactly the same account (assuming you don't want to withdraw a large lump sum from the 25% tax free portion).
So the SIPP is your pension pot where you can withdraw either through UFPLS method or drawdown (or take an annuity). In case of drawdown you take the tax free cash but might need to create a drawdown account to reinvest the taxable part (any surplus). For example here’s how that works at vanguard: www.vanguardinvestor.co.uk/investing-explained/flexible-income
@@IncomeBoost42 - Thanks, but the link seems to imply that with flexi drawdown you have to use one of the provider's investment pathway funds for the crystallised monies still in your pot. Other SIPP providers seem to suggest I would still in charge of my investment decisions, i.e. no different from UFPLS, unless I'm reading it wrong. Specifically if I take £16760 (25% tax free & 75% taxed but within the personal allowance) each year from my pot, do I have to put any other part of my pot into a separate flexi drawdown account & have others choose how that's invested?
@Benzknees You’ll get to choose how it’s invested. That said, the Vanguard platform has traditionally has only offered their branded funds - so limited choice there. You can take £16,760 without having to create a drawdown account, that’s what UFPLS is really for. £16,760 is a nice figure because it means you’ll usually pay no tax. However, if you need to withdraw more then FAD offers further tax benefits worth considering. Also remember UFPLS automatically triggers MPAA i.e. annual pension contribution limit falls from 60k to 10k. This can potentially be avoided with FAD.
@@IncomeBoost42 - Thanks for clarifying. Regarding MPAA presumably you mean this is avoided if you only drawdown the 25% tax free portion of your SIPP?
