Drawdown Process DIY or IFA

segovia

I am transferring my own and my OH personal pensions into a SIPP as our current providers don't offer any flexi access drawdown. I have taken advice from and IFA and I am happy to pay for the IFA services provided so far which includes all of the transfers to the SIPP.

The ongoing IFA fees of 0.6% are still in discussion; however, there is a strong likelihood that I'll decline the offer of ongoing support which would obviously include advice about drawdown as an when that arises in 4 years time.

Would I need further IFA advice in 4 years when it came to drawdown or is this doable risk-free as a DIY?

J

newatc

It'a obviously doable DIY as many do but there always risks in investing. If you want no risks the answer is an annuity.
I currently manage my wife's drawdown SIPP without any issues. As she went into Drawdown, I put one year's pension into cash and choose "income funds" which top up the cash. It is being going for 2 years now and I've not needed to sell anything yet and the fund value has gone up (thanks to markets).
I think I may sell something later this year to bring the cash amount back up to year (about 7 months at the moment).
As I have demonstrated on other threads, I'm not an expert but I'm quite happy we went down the drawdown route rather than annuity though my advice to my wife, it to turn the pension into an annuity when I'm no longer around.
I think the route you take needs to take into account your risk profile in regard to your pensions and your other income streams.

OldMusicGuy

You don't need further IFA advice, but nothing is risk free, whether it's DIY or IFA.

There's plenty of resources that you can use to educate yourself about managing investments through drawdown. It took me about 5 years to get to the point where I am confident of doing it myself. If you are not confident, then you should use an IFA for advice.

segovia

newatc wrote: »

It'a obviously doable DIY as many do but there always risks in investing. If you want no risks the answer is an annuity.
I currently manage my wife's drawdown SIPP without any issues. As she went into Drawdown, I put one year's pension into cash and choose "income funds" which top up the cash. It is being going for 2 years now and I've not needed to sell anything yet and the fund value has gone up (thanks to markets).
I think I may sell something later this year to bring the cash amount back up to year (about 7 months at the moment).
As I have demonstrated on other threads, I'm not an expert but I'm quite happy we went down the drawdown route rather than annuity though my advice to my wife, it to turn the pension into an annuity when I'm no longer around.
I think the route you take needs to take into account your risk profile in regard to your pensions and your other income streams.

Thanks, can you share an example of an income fund?

How do you define one year's pension?

J

segovia

OldMusicGuy wrote: »

You don't need further IFA advice, but nothing is risk free, whether it's DIY or IFA.

There's plenty of resources that you can use to educate yourself about managing investments through drawdown. It took me about 5 years to get to the point where I am confident of doing it myself. If you are not confident, then you should use an IFA for advice.

At least I have 4 years to learn and if I don't then I'll probably engage another IFA. I don't see the value in paying a retainer over the next 4 years which will cost me about £10,000.00 in IFA fees

J

Prism

Interesting paper on the matter

https://media.morningstar.com/uk/MEDIA/Research_paper/UK_Safe_Withdrawal_Rates_ForRetirees.pdf

I will be using a variable withdrawal rate strategy rather than a 'safe' withdrawal rate.

BLB53

Drawdown is fairly straight forward. Depending on your asset allocation between equities/bonds, you can choose a multi-asset index fund such as Vanguard Lifestrategy 60 or 40 (inc) and take the natural yield of 1.5% then sell down units for additional income.

Alternatively hold a basket of income investment trusts - see income builder

https://www.theaic.co.uk/income-finder/income-builder

As you have some time, have a read of Edwards book 'DIY Pensions' which has a section on income drawdown in retirement.

newatc

segovia wrote: »

Thanks, can you share an example of an income fund?

How do you define one year's pension?

J

Most funds have accumulation (dividends reinvested) or income (dividends paid out). As a guide the Vanguard LS 60/20 pays around 1.6%.
One year's pension is probably somewhere between what you need and what you have available.
In our case I have restricted it a little so that my wife does not pay tax so that was the determining factor. Her pension is small compared to mine.