25% TFLS from SIPP - how does it work?

dunroving

I have posted previously about the idea of taking my 25% TFLS from my SIPP, which I plan to do fairly soon (as long as the market continues to stabilize).

I contacted Fidelity, and below are select portions of their reply:

"In order to initiate this process you will need to arrange a telephone appointment with a Fidelity Retirement Specialist ... [they] will ... discuss the process and go through a declaration. They will then send you the appropriate form to complete and return to us. ... Once we receive the form, we will verify your bank details and check to see if there is sufficient money in your
SIPP cash account to pay your 25% TFC. ...If we have successfully verified your bank details and there is sufficient cash, you will receive the money within 7 working days of us receiving the form. If there isn't sufficient cash, we will need to arrange for units to be sold from your funds; as such, the process can take up to 13 working days from when we receive the form.
The remaining 75% will be moved into a new Fidelity SIPP drawdown account."

So, from this, I figure things will be simpler if I just decide which funds and what proportion I want to cash in and do so before starting the above, to ensure that I have *at least* 25% of my SIPP value in my cash account.

Does anyone have experience of doing this? I am wondering about "timing" in terms of (a) when the fund valuations occur, and (b) what happens regarding changes in fund value during this process? The last thing I want is for the cash to end up being more than 25% of the total SIPP value, and then I hit the MPAA issue. Will they simply say that at time X on day Y, the total SIPP value is £120k (for example), hive off £30k from my cash account to a separate "place", move the remainder into a drawdown account, and any changes in fund values after time X on day Y are irrelevant?

I'm also concerned that during this several day process, if the market tanks by 10%, can I call and order a cancellation, or put a stop/pause on the process? Currently it seems I don't have much control over when the conversation/cashing in will take place within a 7 working day window.

With my US 403(b) (money purchase/DB type retirement account), I can ask for any percentage of the total value of all funds to be cashed in and they can do that fairly easily on the same day ... but it seems that with Fidelity it isn't quite that straightforward for some reason.

dunstonh

With my US 403(b) (money purchase/DB type retirement account), I can ask for any percentage of the total value of all funds to be cashed in and they can do that fairly easily on the same day ... but it seems that with Fidelity it isn't quite that straightforward for some reason.

Fidelity isnt really a full DIY provider. If you go with them, you accept their clunky website and limitations. If you dont want those then you use a different provider. They are not much cop as an intermediary provider either.

Even on the advice side you get many where its paperless and electronic and the money can be in the account inside the hour.

With most SIPPs, you need to sell to cash first before you can take the money out. Some wizards will include the sale instruction at the point you type it in.

I'm also concerned that during this several day process, if the market tanks by 10%, can I call and order a cancellation, or put a stop/pause on the process?

As it will be in cash, that should not be an issue.

dunroving

dunstonh wrote: »

As it will be in cash, that should not be an issue.

I was thinking purely mathematically that it would affect how much I can then withdraw as TFLS.

In the above example, if I moved £30k to cash, and then the market tanked by 10% (as has just happened) while the paperwork is going back and forth, my £90k in S&S would be more like £81k by the time the transaction occurs. My 25% TFLS would thereby be reduced to £111k * .25 = £27,750 rather than £30k.

So yes, I wouldn't lose any cash, but I would lose the tax-free status of ca. £2,250 in cash (if my sums are correct).

dunroving

I suppose I shouldn't complain. Without the recent pensions freedoms, I wouldn't even be able to take 25% TFLS.

NoMore

Think of it that you have saved £2250 by it not being invested during the loss. You can always re invest it as you aren't taking it as part of the TFLS

mark1959

I think you're quite right in complaining, as the pension companies in my and a few friends who are drawing money out are delivering a poor service. So much so i'm probably going to transfer to another provider in a few months, who will be probably just as sh1te. I suppose some of it is because they're terrified of miss- selling so would rather not do anything at all.

AlanP_2

mark1959 wrote: »

I think you're quite right in complaining, as the pension companies in my and a few friends who are drawing money out are delivering a poor service. So much so i'm probably going to transfer to another provider in a few months, who will be probably just as sh1te. I suppose some of it is because they're terrified of miss- selling so would rather not do anything at all.

Complaining about what? I didn't read the thread as a complaining one, just checking the sense and possible consequences.

They have explained the process to the OP - the fact that it is funds which have a 2-3 day settlement period is not their fault.

The OP won't lose out if market drops. He would be able to withdraw slightly less cash admittedly but it would still be 25% of value tax free.

Would then have a few quid left in account which could be reinvested, wouldn't lose tax benefits of pension wrapper or anything.

So, please explain what there is to complain about?

dunstonh

dunroving wrote: »

I suppose I shouldn't complain. Without the recent pensions freedoms, I wouldn't even be able to take 25% TFLS.

The ability to take the 25% without income has existed for well over a decade. That side of drawdown was unchanged with the pension freedoms.

mark1959

O.K Mr p [you don't work in the pension industry perchance?]
The OP is complaining about the hoops he has to jump through to draw their money out. At least that's how I read it. And I agree with him/her. So why are you so bothered? He/she even uses the word "complaining" in a subsequent post.

AlanP_2

mark1959 wrote: »

O.K Mr p [you don't work in the pension industry perchance?]
The OP is complaining about the hoops he has to jump through to draw their money out. At least that's how I read it. And I agree with him/her. So why are you so bothered? He/she even uses the word "complaining" in a subsequent post.

No, just make use of pensions and other investment options.

It just isn't clear to me what the hoops are - Sell some funds for cash, take 25% of overall pot value out tax free.

Every industry and every business has a process for delivering their goods and services, this is just the "access pension process" surely?

Out of interest what do you think would be a better process with less hoops?

dunstonh

The OP is complaining about the hoops he has to jump through to draw their money out. At least that's how I read it. And I agree with him/her. So why are you so bothered?

Fidelity's platform is old fashioned and their software is old. The way they do things is because of that. The OP or anyone else is free to move to a provider with better software whenever they like. Despite the fact I think their offering is not very good, there are plenty of people signing up to them all the time. They appear in several recent posts by people saying they are going to use them. Mainly as they are a relatively cheap option. Buy cheap, get cheap fits well here.