AVC to Low Cost SIPP for DIY Flexible Drawdown

elephant_guy

I currently have a Group AVC with Standard Life valued at 80k that I would like to move on retirement into a SIPP in order to begin flexible drawdown.

After taking the 25% lump sum, I will be probably investing mostly in funds and not shares and do not anticipate making more than a couple of trades a year withdrawing 4-5% a year in income.

My research suggests that Hargreaves Lansdowne or Alliance Trust would probably be my best option but the proposed charging structure at HL has put the wind up me a bit.

Any suggestions as to which platforms are currently cheapest for my particular situation ?

Thanks in advance...

dunstonh

Why do you need a platform? Would an insured contract (such as a personal pension) be better value?

elephant_guy

Sorry

Probably my lack of knowledge but I thought that my investments needed to be in a SIPP before I could take the Drawdown option outlined ?

Basically I am looking for the most cost effective means of entering drawdown whilst keeping my investments in tracker funds or a similar low cost investment appreciating the resulting reduction in investment options this may then cause.

Information regarding other low cost options apart from a SIPP would be of great help.

mania112

As you concede lack of knowledge, are you also sure you want Flexible Drawdown.

Flexible is actually a product type (although you may just mean you want flexible income options).

Flexible allows you to withdraw as much income as you want (as opposed to maximum limits prescribed by the government), but to utilise this product you must have £20k pa of secured income (i,e an Annuity).

The alternative, 'regular' income drawdown, is known as Capped Drawdown.

EdGasket

Any idea how much 'regular' income drawdown I could take with a pension of value £150K?

grey_gym_sock

EdGasket wrote: »

Any idea how much 'regular' income drawdown I could take with a pension of value £150K?

it depends on your age: see http://www.hl.co.uk/pensions/income-drawdown/income-drawdown-calculator

elephant_guy

mania112 wrote: »

As you concede lack of knowledge, are you also sure you want Flexible Drawdown.

Flexible is actually a product type (although you may just mean you want flexible income options).

Flexible allows you to withdraw as much income as you want (as opposed to maximum limits prescribed by the government), but to utilise this product you must have £20k pa of secured income (i,e an Annuity).

The alternative, 'regular' income drawdown, is known as Capped Drawdown.

I will have a 20k+ occupational pension but wanted to know the cheapest way to access the additional funds currently in an AVC. I was under the impression that a SIPP was the only means to do this.

Low cost options to access the AVC (as an addition to my pension) via drawdown is my goal. I didnt think this could be achieved by a Personal Pension but as I said my knowledge is not extensive.

Can anyone outline the options ?

zagfles

Is the AVC separate to the main plan? Some AVCs are linked to the main plan so the 25% lump sum available applies to the combined value, meaning that in a lot of cases you can take the entire AVC as a tax free lump sum.

If not, HL are reasonable value for drawdown as their drawdown specific fees are lower than most - however their custody fee for the funds are higher (0.45% on their new charging) so you'd need to do the sums.

A lot of personal pension options seem to insist you have financial advice before starting drawdown, this will likely cost you more than using a SIPP.

elephant_guy

zagfles wrote: »

Is the AVC separate to the main plan? Some AVCs are linked to the main plan so the 25% lump sum available applies to the combined value, meaning that in a lot of cases you can take the entire AVC as a tax free lump sum.

If not, HL are reasonable value for drawdown as their drawdown specific fees are lower than most - however their custody fee for the funds are higher (0.45% on their new charging) so you'd need to do the sums.

A lot of personal pension options seem to insist you have financial advice before starting drawdown, this will likely cost you more than using a SIPP.

Thanks for the response Zagfles..

Its a Group AVC linked to my main scheme but unfortunately the scheme rules do not permit me to take the 25% lump sum for the main pension from the AVC - That would have been ideal..

Probably won't be buying shares and probably 4 or 5 tracker funds with less than 2 or 3 changes in any 12 month period.

If HL or a similar company is best suited to my particular needs, does the fund need to be in a SIPP wrapper before drawdown can be initiated ?

zagfles

elephant_guy wrote: »

Thanks for the response Zagfles..

Its a Group AVC linked to my main scheme but unfortunately the scheme rules do not permit me to take the 25% lump sum for the main pension from the AVC - That would have been ideal..

Probably won't be buying shares and probably 4 or 5 tracker funds with less than 2 or 3 changes in any 12 month period.

If HL or a similar company is best suited to my particular needs, does the fund need to be in a SIPP wrapper before drawdown can be initiated ?

Yes, or at least in some sort of pension wrapper that allows drawdown. HL are probably quite good value for what you're after, they're more expensive for most things but for smallish SIPPs and drawdown they're very competitive.