Important information prior to moving your client into Drawdown
Moving your client into Flexi-Access Drawdown allows them to access 25% of their pension as a tax-free lump sum, while the remaining amount can be taken as a combination of taxable income or lump sums.Before you start this process, you will need to ensure there is enough cash held in the accumulation arrangement to pay the following:
- Any tax-free cash requirement required
- Your Initial Adviser Charge, if applicable
- Potential market movement during the process
- Any additional income value the client may require
If there is not enough cash available you will need to sell assets and wait for them to settle before you proceed. If you need to sell assets first this can take up to 5 working days for the trade to settle (depending on the fund manager and when the trade was placed) and for the cash to be available for this drawdown request.
How can I request a Post Crystallisation Lump Sum (PCLS)?
To request a Pension Commencement Lump Sum on the Elevate Platform, please see Flexi access drawdown guide.How do I set up a one-off payment from my client’s drawdown pot?
To request a one-off pension income payment on the Elevate Platform, follow these steps:- To do this go to: New Work > Change pension payments
- Select Take a one-off payment from the relevant pension pot and press Go.
- Confirm gross figure to be requested. Net value paid will be subject to clients tax code.
- Confirm whether advice has been given and client authority to proceed.
- Select the client’s bank details to make the payment to.
- Review the request and press Go when happy to proceed.
The payment will go via BACS as a default and this takes 5 days from authorisation. Please note cash must be available and settled. Chaps payments are available for this process although still require 48 hours from authorisation to go through the tax file before having the option of chaps, there will be a £5 charge to the client for this service.
How do I set up a regular payment from my client’s drawdown pot?
To set up a regular pension income payment on the Elevate Platform:- Go to New Work > Change pension payments
- Select Change level of income/Payment details from the relevant pension pot and press Go.
- Confirm the annual gross figure required in the future years text field. Clients with capped drawdown arrangements will need the current years text field completing as well as future years.
- Select the frequency of income, start date and client bank details.
- Review the income payment details at the bottom and press Next step when happy to proceed.
- Step 2, complete the disinvestment strategy for the income.
- Step 3, review income details, generate illustration and confirm.
See Flexi Access Drawdown guide for further detail.
How do I amend my client’s income payment?
To amend a regular pension income payment on the Elevate Platform, follow these steps:- Go to New Work > Change pension payments
- Select Change level of income/Payment details from the relevant pension pot and press Go.
- Confirm the annual gross figure required in the future years text field. Clients with capped drawdown arrangements will need the current years text field completing as well as future years.
- Select the frequency of income, start date and client bank details.
- Review the income payment details at the bottom and press Next step when happy to proceed.
- Step 2, complete the disinvestment strategy for the income.
- Step 3, review income details, generate illustration and confirm.
See Flexi Access Drawdown guide for further detail.
When will my client receive their income or PCLS payment?
Regular withdrawals you will select the payment date when setting up the withdrawal (between 1st and 28th of each month). We will make the payment using the BACS payment system and if the payment date is a non-business day, payment will be made on the last business day before the payment due date.One off income payment will reach the client’s bank account in 5 working days once the payment is authorised. Please note any disinvestment from investments have to be fully settled and the client bank account needs to be verified.
One off PCLS payments are paid same day via Chaps. Please note crystallisation event expectation needs to be submitted by 11am to be paid that day. There must be no outstanding trades, cash for PCLS must be available and client’s bank account verified for payment. Full PCLS payments must not have a direct debit due to collect within 10 working days of submission.
Frequently asked questions
If my client hasn’t taken previous income from their taxable pension pot, what tax code will be used?
The payment will be subject to income tax deducted through PAYE before it is paid to your client. The tax code applied is stipulated by HMRC and will depend on the client’s circumstances and the information we have for them.- If a client is not taking drawdown pension withdrawals and does not have a P45 for the current tax year, the ‘Emergency Code Month 1’ tax code will be used until we are provided with the correct code from HMRC
- If the client is already taking pension withdrawals, we are able to apply the tax code we have in place
Please be aware that if taxable one-off income payments are taken during the tax year, depending on your client’s tax code they may not be taxed as you might normally expect. Regular income payments could also vary as a result of any taxable one-off payments taken.