Annuity or SIPP/Flexi Drawdown

2

Comments

  • Confuciusone
    Confuciusone Posts: 20 Forumite
    Just trying to fully understand, am I correct in thinking...

    A new Money Purchase SIPP Uncrystalised (within limits/allowances) you can make contributions as well as take ad hoc withdrawals, frist 25% of all withdrawls being tax free and 75% taxable.

    Her transferred fund, wanting to take PCLS 25% tax free, would then have to be Crystallised and become a Drawdown Fund no contributions allowed, all ad hoc withdrawals would be taxable
  • jamesd
    jamesd Posts: 26,103 Forumite
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    Under the new rules it's not really 35 years at the moment, just however many it takes to get to the maximum flat rate. So the only way to know if more years would help is to check her state pension statement.
  • jamesd
    jamesd Posts: 26,103 Forumite
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    A fund is uncrystallised until the tax free lump sum has been taken. Or until something else has been taken out or age 75. Transfer makes no difference.
  • Confuciusone
    Confuciusone Posts: 20 Forumite
    Thanks James
    jamesd wrote: »
    Under the new rules it's not really 35 years at the moment, just however many it takes to get to the maximum flat rate. So the only way to know if more years would help is to check her state pension statement.

    Checked online, she's hopefully just managed to get full State Pension with this tax years NI contributions.
    jamesd wrote: »
    Transfer makes no difference.

    She wants to transfer her Prudential Pension Fund as they only offer a choice of 9 Funds and high charges/fees.

    Thinking H & L would offer more choice, larger spread and lower charges, even investing in Prudential funds with H & L the charges/fees seem lower?
  • BLB53
    BLB53 Posts: 1,583 Forumite
    Two questions really does our thinking stack up and any recommendations on trusted reputable SIPP / Flexi-Drawdown Fund providers.
    Yes, if you are OK going diy then it makes a lot of sense to transfer to a sipp.

    I use AJ Bell Youinvest for my flexi drawdown and would recommend them as would work out quite a bit cheaper than HL whether you are investing in funds or investment trusts etc.

    To compare providers have a look at the monevator comparison page
    http://monevator.com/compare-uk-cheapest-online-brokers/

    and also diy investor http://diyinvestoruk.blogspot.co.uk/2016/08/selecting-your-diy-pension-platform.html

    So far as funds etc. you could keep half in cash and invest the other half in Vanguard Lifestrategy 20 or 40 for a fairly simple option. The other route may be a basket of investment trusts.
  • Confuciusone
    Confuciusone Posts: 20 Forumite
    Thanks BLB53, I'll have look
  • jamesd
    jamesd Posts: 26,103 Forumite
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    edited 19 March 2017 at 8:39PM
    BLB53 wrote: »
    I use AJ Bell Youinvest for my flexi drawdown and would recommend them as would work out quite a bit cheaper than HL whether you are investing in funds or investment trusts etc.
    You may be forgetting that Youinvest charges £120 a year for drawdown while HL charges nothing.

    In the first year that's a £120 charge on £70,000 before drawing £11,500, £58,500. That's 0.205%. Platform charges 0.45% HL vs 0.25% Youinvest. So year one Youinvest combined is already more expensive at 0.455% and it only gets worse in later years as £120 becomes an ever-larger percentage of the pot value.

    Then add in the Youinvest £1.50 fund dealing charge Vs nil at HL.
  • BLB53
    BLB53 Posts: 1,583 Forumite
    You may be forgetting that Youinvest charges £120 a year for drawdown while HL charges nothing.
    No, I do not pay anything for my flexi-drawdown - just the £25 once per year for the one-off income transfer to my bank. I assume the OP would use the same route.
  • jamesd
    jamesd Posts: 26,103 Forumite
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    edited 20 March 2017 at 6:53AM
    BLB53 wrote: »
    No, I do not pay anything for my flexi-drawdown - just the £25 once per year for the one-off income transfer to my bank. I assume the OP would use the same route.
    Thanks, looking at their charges they do have that £25 plus selling costs option instead of just the higher charge mentioned in the comparison tables.

    That significantly improves the comparison, cutting the first year cost to 0.25% plus 0.045%, 0.29% combined vs 0.45%. Plus I assume only one fund sale being used.

    Year 2: £49k invested, 0.25% plus 0.054%, 0.304% combined.
    Year 3: £36.5k invested, 0.25% plus 0.073%, 0.323% combined.
    Year 4: £25k invested, 0.25% plus 0.106%, 0.356% combined.
    Year 5: £13.5k invested, 0.25% plus 0.196%, 0.446% combined.
    Year 6: allowing for personal allowance increases, just a final charge at infinite percentage this year.
  • Confuciusone
    Confuciusone Posts: 20 Forumite
    So AJ Bell Youinvest work out a better option than H & L?

    Transfering her Fund to AJ Bell Youinvest, taking 25% LS, then Flexi Drawdown, taking £11.5k once a year would work out cheaper.

    AJ Bell Youinvest have a Purchase an annuity £150 for converting fund to drawdown?
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