How do these SIPPs work in drawdown?

anselld

EdSwippet wrote: »

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.

That is fine up to a point, however the purpose of entering drawdown is usually to take income so it is going to be very difficult to keep track of the split in practice.

My problem is approaching the LTA, I want to be able to have visibility of the growth element of crystallised funds so that I can make sure I withdraw that prior to 75. I fear it is going to be unworkable (for me) with a mixed pot and worse I have doubts in the provider's ability to keep tabs correctly.

EdSwippet

shinytop wrote: »

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.

For me, it's about getting different long-term growth rates. I have 5% LTA headroom left to me, and I have crystallised 2/3 of my pension so far. I want bonds in the crystallised part, so that it grows only moderately and lessens problems with the LTA test at age 75 -- I balance this with stocks in ISAs and trading account. I would be happy with faster-growth assets in the uncrystallised part to optimise the PCLS I can draw from that when I crystallise the final 1/3.

I realise that I'm probably an edge case in all of this. Most people will probably crystallise their entire pension in one go, and so never encounter any of the quirks of non-segregated SIPPs. That doesn't stop it being slightly annoying for me, though.

shinytop wrote: »

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.

It definitely looks like a 'feature' -- if one can even call it this -- that exists for the convenience of the platform rather than the convenience of the customer.

I think I can work with it, but I will need to carefully finesse crystallising the remainder of my pension, probably periodically in ever smaller chunks as it converges on the LTA. Breaching the LTA when I don't have to would be an unforced error. The problem here is the process of crystallisation itself. All manual, all paper and snail-mail based. A minimum two weeks or so of lead time, during which markets can move a lot, in either direction.

EdSwippet

anselld wrote: »

That is fine up to a point, however the purpose of entering drawdown is usually to take income so it is going to be very difficult to keep track of the split in practice.

Interactive Investor should keep track of it. The main problem would perhaps be obtaining it. My recollection of speaking to them was that they could tell you if you ask and that they planned to make it visible somehow within online accounts. The latter would obviously be much better for everyone, failing a switch to proper segregation, but I don't know if or when this would be (or where, or how), as I haven't yet completed my Interactive Investor SIPP crystallisation. Maybe in a week or so ...

In my case I won't be either taking income or making any contributions, so once I know this number it should stay constant. I'll work it into my spreadsheets, and hopefully everything will track for me.

So perhaps workable, but it's not a particularly customer-friendly way for Interactive Investor (and others) to do things, though. I have an Aviva (MyMoney) ex-employer pension in drawdown, and that operates much more transparently. Aviva were also slicker when it came to the crystallisation process itself.