Why are pensions so hard to draw down on?

[Gilgongo]

Does anyone know why you apparently can't set up an automated withdrawal on a pension once it's in drawdown? As far as I can tell, if you want to live off invested pension savings as opposed to buying an annuity, you have to log in to your online account (or if you want to hang on the phone to India for 45 mins you can do that way too) and make manual sales/transfers every time you want some money. Really?

Meanwhile, ISAs appear to be automatable for draw down. What gives?

It's not insurmountable of course, but if I lost capacity it would be annoying (to say that least) for my partner to have to work out how to do it.

[swill453]

Does anyone know why you apparently can't set up an automated withdrawal on a pension once it's in drawdown? As far as I can tell, if you want to live off invested pension savings as opposed to buying an annuity, you have to log in to your online account (or if you want to hang on the phone to India for 45 mins you can do that way too) and make manual sales/transfers every time you want some money. Really?

Meanwhile, ISAs appear to be automatable for draw down. What gives?

It's not insurmountable of course, but if I lost capacity it would be annoying (to say that least) for my partner to have to work out how to do it.

It depends on your provider.

With AJBell, for example, you can set up regular drawdowns quite easily. It has to be from free cash in you account though - is that your main problem? I'm not sure I'd be happy with the pension provider choosing investments and timing to sell for me, so I prefer it this way.

(As far as I know the situation is the same for ISAs.)

In my case my drawdown is always from cash dividends sitting in my account, so selling isn't an issue anyway.

Scott.

[tacpot12]

I also use AJ Bell, and foresaw this problem when planning my retirement. I invested 90% of my retirement portfolio in dividend producing assets, and have a regular withdrawal setup with AJ Bell to pay me from the dividend income on a montly basis. This withdrawal is an UFPLS payment, but I don't see any reason why it could not also be handled as Flexi Drawdown payment from the crystallised portion of your fund.

If all your assets are accumulation units, then a decision has to be made as to what to sell. Automating this is could be complex. Do they sell a fraction of every holding, do they only sell certain units, do they only sell one unit? It is functionality that I think will come to platforms, but it's not their yet. Have you written to your platform provider to ask them to provide this functionality?

[Arborbridge]

Does anyone know why you apparently can't set up an automated withdrawal on a pension once it's in drawdown? As far as I can tell, if you want to live off invested pension savings as opposed to buying an annuity, you have to log in to your online account (or if you want to hang on the phone to India for 45 mins you can do that way too) and make manual sales/transfers every time you want some money. Really?

Meanwhile, ISAs appear to be automatable for draw down. What gives?

It's not insurmountable of course, but if I lost capacity it would be annoying (to say that least) for my partner to have to work out how to do it.

I draw out a regular amount a month from the cash accumulating in my SIPP. There's no phoning anyone, and I can alter he amount whenever I like on-line.

Arb.

[DrFfybes]

I Think Vanguard will do that, although it isn't explicit in their documentation, only that you can stay 'fully invested' and 'choose your regular income', which implies they'll sell down if you wish.

Old Mutual (Quilter) provide this with a GIA, not sure about with a SIPP though.

Paul

[xxd09]

I run a cash float of 2+ year’s living expenses in instant access cash ISAs which I replenish once a financial year from my SIPP and/ or ISA
My wife’s ISA and SIPP are also available if required
I just sell the required number of fund units -equities and/or bonds-that I require (maintaining my Asset Allocation ) at a time of my choosing and reclaim any overpaid tax via an online P55 form if needed
xxd09

[SebsCat]

Does anyone know why you apparently can't set up an automated withdrawal on a pension once it's in drawdown? As far as I can tell, if you want to live off invested pension savings as opposed to buying an annuity, you have to log in to your online account (or if you want to hang on the phone to India for 45 mins you can do that way too) and make manual sales/transfers every time you want some money. Really?

Meanwhile, ISAs appear to be automatable for draw down. What gives?

It's not insurmountable of course, but if I lost capacity it would be annoying (to say that least) for my partner to have to work out how to do it.

As others have pointed out, there are SIPP providers that will pay out regular amounts. If yours won't do this then it might be worth considering switching. This does require some thought since it is necessary for you to make sure there will be sufficient cash available for each payment.

ISA providers will pay out dividends as they are received (or lumped together over a specific period). I guess that SIPP providers don't do this because it can create a bit of a nightmare when it comes to the PAYE they are required to deduct on behalf of HMRC. eg the dividends from my wife's SIPP are zero in April but in May amount to nearly 19% of the yearly total then 6% for June, 1.5% in July and 25% in August. This sort of payment pattern would almost certainly lead to a lot of additional income tax being paid at the higher rate which would then need to be claimed back or else wait a year or more for HMRC to refund it.

FWIW, my wife has her SIPP (AJ Bell, all in drawdown) set up to pay a regular amount. It's a bit overkill really, but I have a spreadsheet that tracks the expected dividends and makes sure there is always at least 2 months cash reserve available within the SIPP. That way there's plenty of time to adjust things even if we get a pandemic type scenario where previously announced dividends are cancelled.

[Alaric]

[
As others have pointed out, there are SIPP providers that will pay out regular amounts..

Thr problem is mostly taxation as unlike ISAs and taxed accounts, it's complicated to pay out dividends as and when received. The work around is as several have suggested is to hold a cash buffer and instruct the SIPP pr ovider to make regular payments from this. Alternatively make the withdrawals annually.