Summary:

Introduction
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Lifetime Allowance is a limit on the amount of pension benefit that can be drawn from pension schemes without triggering an extra tax charge. This is a critical factor to consider when planning for retirement. Timeline Planning offers a robust platform that models various scenarios, including Flexi-Access Drawdowns and Benefit Crystallisation Events, to give you a comprehensive view of your financial landscape in retirement.
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​Flexi-Access Drawdown and Lifetime Allowance
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Setting up a Flexi-Access Drawdown
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In Timeline Planning, Flexi-Access Drawdown is treated as a crystallized fund, meaning it has already been tested against the member's LTA. Advisors can set up an Uncrystallized account and a Flexi-Access Drawdown account, then designate funds to provide a drawdown pension. 25% of this amount will be tax-free, and the remaining 75% will be transferred to the Flexi-Access Drawdown account, to be taxed upon withdrawal.
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​Example
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Assume John has £400,000 in his Uncrystallized account with 100% of his LTA available. On crystallizing the entire sum, he will receive £100,000 tax-free, and the remaining £300,000 will be designated to the Flexi-Access Drawdown account, to be taxed upon withdrawal. To do so, you need to go to Settings > Contributions & Transfers and create a new transfer from the Uncrystallized account to the Flexi-access drawdown account. As you can see on the cashflow chart, 25% is spent that year tax-free and the rest is transferred to the Flexi-access drawdown account:

​Conclusions
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Timeline Planning offers a nuanced approach to managing both Flexi-Access Drawdowns and Uncrystallized Funds, incorporating the complexities of the UK's tax system and Lifetime Allowance. Understanding how these elements are modeled in Timeline can help you prepare a financial plan your clients love.