Drawdown logistics

whiteflag_3

EdInvestor wrote: »

Kittie's comments are referring to online trading arrangements to get paid drawdown income, which are simple and inexpensive, no intermediary required.

The link you refer to seems to be discussing learning how to invest, an entirely different subject?

Isnt knowing how to invest absolutely crucial to running SIPP?

Edinvestor while I appreciate you find it difficult to avoid sticking your nose in wheres it not required, im pretty sure Kittie is old enough and wise enough to be able to answer for herself.

[Deleted User]

I do find it flattering that whiteflag follows my posts. Perhaps he would like some lessons on investing, after all it is never too late to learn

Anyone can learn like I did. I simply state that a sipp in sippdeal is cheap to run and very cheap to vest

caveat_emptor

dxt wrote: »

I have been quoted various fees by IFAs for setting up drawdowns and these involve setup charges and ongoing advice and also the loss of control as they want to be the ones accessing the wrapper and doing the trades. I am happy to accept the risks of my own actions, I have been careful long enough in accumulating the fund and will continue to so me in drawing income from it.

I've posted before on my bad experience with a 'reputable' IFA and I would be very wary about the 'ongoing advice' offered by any IFA. I entered into such an agreement and the advice was not ongoing in fact it never got going. When I questioned my IFA representative about this he said 'we're not active advisors', which left me lost for words and since then IFA-less.

jamesd

EdInvestor wrote: »

The link you refer to seems to be discussing learning how to invest, an entirely different subject?

whiteflag wrote: »

Isnt knowing how to invest absolutely crucial to running SIPP?

dxt wrote: »

I approach retirement and have a pension pot of over £500k to transfer to drawdown. I have no financial adviser and have managed the pot since inception as I do my ISAs. The pension will form only part of my retirement income. I am happy to continue to manage the pot when in drawdown and fully understand the risks involved.

Whiteflag, dxt appears to have already addressed your concern in the initial post.

jamesd

EdGasket wrote: »

Question: Lets say I have a fully invested SIPP (with SippDeal) but decide I want to take 25% lump sum and start the drawdown. Do I sell 25% of the holdings myself and turn it into cash in order to draw out as a lump sum and leave the remainder invested or does it work some other way? I guess a similar question arrises for each drawdown payment although the cash required would be less.

Yes, you'd sell investments to get cash in the account that's sufficient to cover 25% of the pension pot value.

For the regular drawdown payments you'd generally arrange to have some cash in the pot and to have that topped up by dividend or distribution payments. Perhaps enough for six months to two or three year's income, depending on how often and how even the dividend and distribution payments are and how long you want the cash to cover income without a need to sell during a market downturn. Review periodically and if the cash needs topping up to cover the income either sell investments or reduce the income being taken.

There's a topic dedicated to EdGasket's question so better to reply over there.

whiteflag_3

kittie wrote: »

I do find it flattering that whiteflag follows my posts.

No Kittie dont flatter yourself .

Just be a bit more honest with the posters that dont have the benefit of reading some of your other posts as I do.

Be honest with yourself as well - just looking at your posts on here its obvious that running your SIPPS are a full time occupation.

Yet again you dodge the question- are you and Edinvestor related as its a trait both of you posess?

EdInvestor

Don't be so silly whiteflag.I may as well ask whether you and dunstonh are related since it is obvious that running financial advisory services is a full time job for both of you.:rolleyes:

MiloH

jamesd wrote: »

MiloH, source of the 75 age was one of the Pensions Commission reports, the second, I think. A 6% critical yield doesn't sound unreasonable so that seems to fit.

I've had a skim read of the Pensions Commission Second Report and I think you may be referring to the following quote found on page 227 at this link:

"As life expectancies increase, the annuity rate for early annuities will look increasingly unattractive, and the benefits of delaying annuitisation will become clearer. Government neither can nor should interfere with this market adjustment, which will provide an important incentive for people to delay retirement."

If there's another comment in the report that I've missed please let me know. If this is the comment you're referring to then I would say that putting the report into context (it's a report aimed at tackling the shortfall in projected future pensions) then the second of those two sentences should be the focus. In other words, yes, annuities become better value the shorter that one's life expectancy is, but that the Pension Commission argue this will become an increasing incentive for people to delay retirement. It is not, in my opinion, logical to conclude that this is advocating drawdown for people who are not delaying retirement.

On the 6% critical yield, I know from your second paragraph that you are agreeing that if someone is targeting a low investment return they should consider alternative strategies, but for other readers who are unsure I just want to stress that to have a realistic prospect of getting a 6% annual return you need to adopt at least a moderate risk profile. For example, using a projection tool with data provided by a leading firm of actuaries, a "Cautious" investor looking to save for 10 years may consider a portfolio of 57% fixed interest (bonds and gilts) and 43% company shares and property as an efficient portfolio. The tool projects a range of returns for this portfolio based on historical data and the mid forecast projection before deduction of charges is 5.8%. In other words, an efficient portfolio for a cautious investor would be unlikely to meet the 6% critical yield needed in this example. As one starts to take more risk, the probability of a higher return increases but so too does the potential downside.

An investor 10 years ago today might have thought 6% per year a realistic target. Back then Bank of England base rates were 5.5%. However the 10 year annualised return for the Edinburgh UK Tracker (as an example tracker fund), with a 0.31% total expense ratio, has delivered a return of 1.24% per year (source. Morningstar). With current economic forecasts and interest rates at 0.5%, I might have thought many investors today would think 6% per year a bit ambitious.

jamesd wrote: »

Agreed about the income. With that low a target buying a range of annuities might be a better idea, just to reduce the risk. A range to diversify against possible annuity provider failure, unlikely though that is. Might be inheritance issues in the way of buying an annuity, though.

Sure, there could be many reasons why dxt may feel drawdown is right and with £500K in his or her pension he or she could probably still survive if the drawdown went pear shaped and there may well be other assets to support lifestyle too. Don't get me wrong, I'm not against drawdown in the right circumstances but it's an area that most people would be well counselled to seek independent financial advice on before making what will be the biggest financial decision for the rest of their lives.

[Deleted User]

whiteflag wrote: »

No Kittie dont flatter yourself .

Just be a bit more honest with the posters that dont have the benefit of reading some of your other posts as I do.

Be honest with yourself as well - just looking at your posts on here its obvious that running your SIPPS are a full time occupation.

Oh no way, I live my life. I am off to the waitrose this morning, followed by lunch out. Lol. I only glance at my sipp daily because I like to see how it has risen tbh.

Lets be honest right now as I won`t tar all IFAs with the same brush but our, recommended, IFA wanted to charge us £35000 just for setting up a pension in a sipp, never mind the year on year charges. Plus he mentioned property companies and hedge funds. That was in august 2007. Just imagine the consequences if we had taken him on :eek:

Off on a winter break soon for 3 weeks and our fully invested sipp will look after itself. That is the whole idea. If anything happened to me then my dh will be very well looked after just by very minimal tweaking ie stating how much he would like per year. It is all so EASY and everything needed is on the sippdeal website

Ignore whiteflag`s digs at me folks. He can`t cope with success by a mature, female, self-taught, money saver/investor/sipp owner and manager for my dh

whiteflag_3

kittie wrote: »

Lets be homest right now as I won`t tar all IFAs with the same brush but our, recommended, IFA wanted to charge us £35000 just for setting up a pension in a sipp, never mind the year on year charges. Plus he mentioned property companies and hedge funds. That was in august 2007. Just imagine the consequences if we had taken him on :eek:

£35000, thats an absolute disgrace , no wonder you have such a bad opinion of IFA's

Ignore whiteflag`s digs at me folks. He can`t cope with success by a mature, female, self-taught, money saver/investor/sipp owner and manager for my dh

Like I said Kittie , dont flatter yourself - Ive no idea who you are, all I know is what I read in your posts. You've summed up my the point I was trying to make- as you say you are self taught therefore you are one of the few in the UK who are actually "qualified" to run their own SIPP. Dont you think having investment knowledge is handy in running a SIPP?