Investments in crystallised and uncrystallised parts of pension

Albermarle

I was wondering what happens to your pension investments when you crystallise part of your DC pension pot and your pension provider is one that keeps the two parts separate . If you say crystallise half of the pot , but want to keep the same investments ( for now anyway ) in both the crystallised and uncrystallised pots . Do they somehow split up your funds; IT's etc with some in one pot and some in another. ?
Just wondering how it works in practice .

dunstonh

Do they somehow split up your funds;

Yes

IT's etc with some in one pot and some in another. ?

Some will actually treated them as two different plans.  So, you will hold x units it on and x units in the other.  Some will apply a percentage split to a single holding.

shinytop

With HL, it's like having 2 separate accounts; one is called SIPP and one SIPP Drawdown (or something like that).  When you crystallise they are split and then you manage both separately so you can have different investments strategies in each.  Some  may see that as a downside as you effectively have 2 SIPPs to manage, re-balance, etc.  

cfw1994

With my Aviva funds, they have to the same investments....but when I crystallise it, I am shown “you have £Xxxx, of which £Yyyy is in drawdown”.
I”m still a couple of years off figuring out how things work when I want to draw monies out - likely from the drawdown portion first to use up growth there first, in my case....

Ceme3000

I'm interested in this too. Does the crystallised pot initially get set up with cash from funds sold in the uncrystallised pot and then it's up to you how you re-invest or will the provider sell and re-purchase immediately so that you are not out of the market. I'm with HL.

dunstonh

With my Aviva funds, they have to the same investments

Aviva Life & pensions do it one way.  Aviva Platform does it the other.

Does the crystallised pot initially get set up with cash from funds sold in the uncrystallised pot and then it's up to you how you re-invest or will the provider sell and re-purchase immediately so that you are not out of the market. I'm with HL.

It depends on your provider

michaels

If the two pots have different tax treatment might that impact on what investment choice you make for each pot?

dunstonh

michaels said:

If the two pots have different tax treatment might that impact on what investment choice you make for each pot?

Potentially, depending on your investment strategy and drawdown strategy.
Some people phase their investments into short term, medium-term and long term.   Depending on your drawdown strategy, you may have more in the crystallised or uncrystallised segment that is long term than the other (or short term or medium term).

cfw1994

dunstonh said:

With my Aviva funds, they have to the same investments

Aviva Life & pensions do it one way.  Aviva Platform does it the other.

Does the crystallised pot initially get set up with cash from funds sold in the uncrystallised pot and then it's up to you how you re-invest or will the provider sell and re-purchase immediately so that you are not out of the market. I'm with HL.

It depends on your provider

No idea how to tell which of those mine is!  

It is our {Company Name} Smart Pension Plan New Generations Pensions Scheme....only oddity (& I only recently noticed, so have pinged them a question) is that it looks like the drawdown funds, which are shown separately, have an even lower (negative in 2 of the funds!!) annual management charge!
For example:
   Aviva Pension BlackRock World ex UK Equity Index Tracker     -0.06 % Annual Management Charge

(normal AMC on that fund is 0.23% - total costs).

Explain that one!  They are paying me to keep those funds?  sweet   

Must admit I am fairly happy with ours just keeping it simple with the same funds for both halves....but I guess some may want a choice of slicing and dicing things.  I like to try to keep things as straightforward as possible (like me!), so we can easily understand it.   

shinytop

Ceme3000 said:

I'm interested in this too. Does the crystallised pot initially get set up uith cash from funds sold in the uncrystallised pot and then it's up to you how you re-invest or will the provider sell and re-purchase immediately so that you are not out of the market. I'm with HL.

More like the latter.  When you crystallise, you need enough cash for the 25% TFLS because that gets transferred out of the SIPP into your nominated bank account.  If you don't have enough , funds will need to be sold (and HL will warn you of this and ask which ones you want to sell if you have more than one).  The other 75% of crystallised pension will be transferred to the SIPP Drawdown account and again HL will ask you which of your investments this is to come from, but your funds are transferred as they are and not as cash.  

hyperhypo

My Aegon ARC pension is represented in two parts , as separate sub-sections for crystallised and uncrystallised. The crystallised funds invested prior to crytallisation remain in species. One interesting thing i've found out since though is that the ability to switch into different assets is restricted in drawdown...for example  i no longer have access to Investment Trusts on this side of the fence (without advice apparently), whilst these are available on the uncrystallised side.  I wasn't aware of this at the time i chose to take the 25% cash.

I hold similar fund choices in the uncrystallised section too, partly purchased from a final contribution from my former employer.

I have been considering moving platform as move into decummulation...if i do choose to move, having my crystallised / uncrystallised parts manageable as separate sections would be high on the wish list....i understand this isn't always the case.

I am planning to manage both sides with separate aims, the smaller uncrystallised part (c. 23%) with more growth focus, more income biased on the crystallised side.

Charges for drawdown may also be a consideration...current platform charges £75 per annum, whilst some providers ..Fidelity , HL i believe, don't make a separate drawdown charge.