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Why no option to withdraw income from pension funds ?

malakoffee
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Why no option to withdraw income from pension funds ?

#104664

Postby malakoffee » December 17th, 2017, 9:47 am

Annuity or drawdown seem to be the standard options.

I was thinking, why not just have income generated by pension pot investments paid out to the pension owner as they arise?

This is so obviously straightforward that there must be a big problem with it.

Any thoughts ?

swill453
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Re: Why no option to withdraw income from pension funds ?

#104680

Postby swill453 » December 17th, 2017, 10:47 am

Pension drawdown is like salary, each transaction generating tax payment to HMRC, production of a payslip etc. If it's in the form of a UFPLS payment then even more paperwork is required.

If you have multiple income events every month then the costs associated with this could make it unviable.

I get the effect of this by having built up a relatively small pool of cash in my SIPP and take a fixed monthly payment. UFPLS as it happens.

Scott.

malakoffee
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Re: Why no option to withdraw income from pension funds ?

#104688

Postby malakoffee » December 17th, 2017, 11:44 am

Thanks. Thus, the pension holding company send any tax due direct to HMRC and planned amounts are easier for everyone to deal with.

The pensioner receives the post-tax residue.

The method that you are using is a variation that permits planned amounts to be paid out. That could be interesting for me if possible on a "Stakeholder Pension".


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