How do these SIPPs work in drawdown?

anselld

I am looking to move my SIPP to a cheaper platform (from Aegon) and shortly to enter flexi access drawdown.

Looking at the cost comparisons the cheapest are Share Centre, iWeb/Halfax or II.

However on investigating each of these it seems they all combine crystallised and uncrystallised funds in a single online account. You need to phone them up to find out whats what at any time.

Seems to me one of the big advantages of FAD is that you can continue to manage the investments in crystallised fund (75%) until needed. How can you do that effectively if they are all mixed up with uncrystallised? What if you hold the same fund in both the crystallised and uncrystallised parts; how do they no what to do if you sell/switch online?

It seems a very poor if not unworkable setup. Aegon at least have two separate accounts but their fees are 3x the cheap platforms.

AnotherJoe

Dont know how it works with those, that sounds very clumsy and awkward.
With the much maligned HL you end up with two SIPP accounts, once with the crystallized investments one without and so you can easily see whats in either.

The fees are dependent upon your investments, I'm with HL , mine are mostly ITs, shares and ETFs and so the fees are capped at quite a low level.

anselld

AnotherJoe wrote: »

Dont know how it works with those, that sounds very clumsy and awkward.
With the much maligned HL you end up with two SIPP accounts, once with the crystallized investments one without and so you can easily see whats in either.

The fees are dependent upon your investments, I'm with HL , mine are mostly ITs, shares and ETFs and so the fees are capped at quite a low level.

That seems the sensible approach but unfortunately HL is more expensive even than Aegon at my pot size (circa 950k).

Albermarle

With the much maligned HL

I would say more the 'much praised' HL from most of the comments I see !
The one that gets maligned is Fidelity , somewhat unfairly in my view.

ColdIron

anselld wrote: »

That seems the sensible approach but unfortunately HL is more expensive even than Aegon at my pot size (circa 950k).

It very much depends upon the type of investments you hold with them. They charge 0.45% but apply a cap at £200 for company shares, investment trusts and ETFs. Unit trusts/OEICS (funds) are not capped. They don't have an additional SIPP fee or charge to crystallise or move into drawdown, many others do. It can be quite efficient

I have often wondered how this works with a single account and it sounds a mess, I presume some of them do not allow phased drawdown

dunstonh

anselld wrote: »

That seems the sensible approach but unfortunately HL is more expensive even than Aegon at my pot size (circa 950k).

Aegon is a cheap platform. They also throw around special terms very easily. For example, on your value, 0.13% would be the ballpark.

However, their software is abysmal. They hoped to be off it by now but the software they are moving to has turned out to be really poor and they are suffering major issues. So, they have left the old platform running side by side for now.

This is probably why they are so easy at issuing special terms. They need to buy the business as the software is not good.

Seems to me one of the big advantages of FAD is that you can continue to manage the investments in crystallised fund (75%) until needed. How can you do that effectively if they are all mixed up with uncrystallised? What if you hold the same fund in both the crystallised and uncrystallised parts; how do they no what to do if you sell/switc

It varies with providers but the dominant method is to have two segments.

anselld

dunstonh wrote: »

Aegon is a cheap platform. They also throw around special terms very easily. For example, on your value, 0.13% would be the ballpark.

However, their software is abysmal. They hoped to be off it by now but the software they are moving to has turned out to be really poor and they are suffering major issues. So, they have left the old platform running side by side for now.

This is probably why they are so easy at issuing special terms. They need to buy the business as the software is not good.



It varies with providers but the dominant method is to have two segments.

Yes, I did have special terms but they removed them when I went non-advised. It is still about 0.12% though, but I could get down to 0.04% with the lowest cost platforms. I obviously don't want to do that and lose basic functionality though!

Albermarle

I think that 0.12 % is already very much at the low end , so I would be concentrating on the customer service , website functionality etc rather than focusing on reducing it even further .
Maybe you could research other providers but not necessarily with just a view to get a lower charge.

anselld

Albermarle wrote: »

I think that 0.12 % is already very much at the low end , so I would be concentrating on the customer service , website functionality etc rather than focusing on reducing it even further .
Maybe you could research other providers but not necessarily with just a view to get a lower charge.

Agreed. I will only move if I can get the same or better functionality at lower cost. Doesn't seem to be available at the moment so will probably stay put.

Still seems £100 a month for old rope though.

EdSwippet

anselld wrote: »

However on investigating each of these it seems they all combine crystallised and uncrystallised funds in a single online account. You need to phone them up to find out whats what at any time.

The way Interactive Investor described it to me when I asked -- and I think I got the gist -- is that they maintain a record of the proportion of your pension that is crystallised. The proportion only changes with contributions, withdrawals, and crystallisation events. Otherwise the SIPP operates as before. There is no attempt to segregate the crystallised and uncrystallised elements.

For example, you have £8,000 in a pension and you crystallise £4,000. You take the £1,000 PCLS and now have £7,000 in the pension. 3/7 of it, £3,000 is crystallised, so 42.86%. Irrespective of any fund switches inside the SIPP, if overall investment gains take the SIPP total balance to £10k, you still have 42.86% crystallised, so £4,286, and now £5,714 uncrystallised.

Aside from being somewhat obscure, the main problem with this is that it does not support holding different assets in the crystallised and uncrystallised elements. I had planned for them to have distinct risk profiles, but that's impossible to achieve under this scheme because all the investments remain lumped together as one. Not "unworkable" then, but not exactly user-friendly either.

shinytop

Aside from being somewhat obscure, the main problem with this is that it does not support holding different assets in the crystallised and uncrystallised elements. I had planned for them to have distinct risk profiles, but that's impossible to achieve under this scheme because all the investments remain lumped together as one. Not "unworkable" then, but not exactly user-friendly either.

Hmm I'll have to think about this. I can't think why I'd personally want different risk profiles but I would like to know easily how much is crystallised and how much isn't. I get the impression that despite having been around for a long lime, the drawdown industry is still somewhat in its infancy. It also might be the case that it's the software being used that is dictating the mechanics of how it works.