To SIPP then draw down or to Drawdown

srcandas

OK I'm sick of Pension fund controllers burning my money so I'm going to take a £55k pot and put it into a SIPP.

I've spoken to hl and they confirm minimal costs when moving a SIPP to a draw down so it may as well be a SIPP until I want the 25% tax free lump or until I want to take income.

I aim to play with individual shares and fixed interest.

My question:

Can I get in this case Aegon to confirm the transfer value, if only for a few days, before I take the final decision or do I have to say "do it" and pray they don't find a way of reducing the value?

Part of the fund is with profits and the statement today offered the final bonus had a value of £5200 but also of course said it could change. The reason I want to go now is that it hasn't been this high in 5 years but has gone as low as £900 4 years ago.

Any thoughts gratefully received :beer:

srcandas

Sorry just realised that title was from a previous thought.

Anyone know of a book called "Investing for the senile"???

Aegis

srcandas wrote: »

OK I'm sick of Pension fund controllers burning my money so I'm going to take a £55k pot and put it into a SIPP.

I've spoken to hl and they confirm minimal costs when moving a SIPP to a draw down so it may as well be a SIPP until I want the 25% tax free lump or until I want to take income.

This isn't really true. HL have low explicit fees, but they keep up to 0.5% trail commission for most of the retail funds you can invest into, and for those funds that don't pay trail they'll charge you £24 a year to hold them. On a portfolio of £55k, this could well start out at £275 or so per year.

Their fees for drawdown are fairly reasonable, but their SIPP fees are not cheap.

I aim to play with individual shares and fixed interest.

In which case you'll probably end up paying £200 a year in holding charges, which is fairly high compared with other execution only SIPPs if memory serves (I've not looked into the direct to customer offerings for a while, but I think I've seen cheaper than this fairly recently for what you're after)

jamesd

HL is not the place to go for direct share holdings in a SIPP. The 0.5% a year fee makes them relatively expensive for that, as do the dealing charges. For your case the cap means that you'll end up paying 0.36% instead of 0.5%.

You can probably choose the funds that the money is invested in at Aegon. So pick a cash fund or something else that you think won't be very volatile. For the with profits part the MVR will probably be quite significant at the moment but that's just a buying opportunity for you with the money you get, which also buys assets at reduced prices.

srcandas

Tx for the replies guys.

Aegis when you say

Their fees for drawdown are fairly reasonable, but their SIPP fees are not cheap.

that was my question to hl.

'Would it be better to go straight to draw down rather than get there via SIPP?'. Are you saying the former is best?.

Note: this is part of other pensions and sipps so the consequences of SIPP with draw down later, or draw down now are not important. Just which strategy reduces expenses.

____________________________-

The worry I have about staying in funds within Aegon relates to the lack of transparency of expenses and the need to protect the current level of final bonus.

Also within Aegon it seems impossible to run to cash quickly and easily.

As for hl I have hunted for cheaper SIPP facilities but taking my trading profile the differences seem small. And to improve the percentage I may increase the fund from £55k to £102k which should lower the percentage. Although clearly within a short time the rules will change so expenses will need to be reviewed.

:beer:

jamesd

Your question asked HL to give advice. They aren't allowed to unless you're paying them for that service.

The advice you should have got is that the two decisions are independent. Use a SIPP it that's what you need for the investments you want. Use drawdown if that's appropriate for you. Pick whatever does the best cost/service combination for what you're after and forget the SIPP label as a factor.

srcandas

jamesd wrote: »

Your question asked HL to give advice. They aren't allowed to unless you're paying them for that service.

The advice you should have got is that the two decisions are independent. Use a SIPP it that's what you need for the investments you want. Use drawdown if that's appropriate for you. Pick whatever does the best cost/service combination for what you're after and forget the SIPP label as a factor.

James I was being succinct.

I asked them:

1. What are the expenses associated with a SIPP
2. What are the expenses associated with a drawdown.
3. What are the expenses associated with moving a SIPP to a drawdown

Based on their reply there was little difference between the two options I mention. That is why I asked Aegis to clarify.

For what I want to do both options meet the requirements so it is just a matter of cheapest option. But clearly if there are hidden SIPP costs that hl have not told me about then that may change the picture.

So that just leaves the issue of getting the maximum final bonus out of Aegon.

:beer: