Drawdown Notional split?

Albermarle

Some platforms (HL may be the only one) operate a 2 tranch system whereby crystalised funds are held in a separate sub-portfolio), 

Fidelity also operate with both a separate uncrystallised & crystallised pots .

Of the DIY/retail platforms these are the only two AFAIK.

Donewithwork1

Pat38493 said:

Donewithwork1 said:

Linton said:

Some platforms (HL may be the only one) operate a 2 tranch system whereby crystalised funds are held in a separate sub-portfolio), others simply use an overall crystallised % value.

However you can easily have the same effect without having separate portfolios.  It doesnt actually matter that the short and long term funds aren't physically separated.  You can just sell the appropriate funds as needed.

Another way could be to take your full TFLS (or a partial one)and put it in an S&S ISA. Use that for the STMMF fund.  Keep the rest in your global tracker in your SIPP which you use to replenish the 5 year buffer when needed. 

There are many other options along the same lines, the main difference is how you avoid the possible risk of liability for higher rate tax.

Thanks Linton.  If I've got this right the downside with just selling appropriate funds is.... if my current notional split in the first year of DD is, say, 3.5% Crystallised and 96.5 Uncrystallised then I would have to hold a much larger amount in a MMF in my uncrystallised pot in order to be able to take an income of 3.5% from MMF's for that year.

The ISA route is a good idea but that would mean crystallising a lot more to get the tax free cash to put into an ISA which could limit the ability to be able to grow the uncrystallised pot to grow more tax free cash in the future.

Hope that makes sense, starting to confuse myself now lo!!

I’m not really following why you think that you need to hold more money in MMF to achieve the same objective.  As Linton explained you keep the same proportion of investments as you always intended, and then you decide which investments to sell to cash when you want to take money out.

You can choose whether you take money out from your drawdown part or by UFPLS or by TFC so in the end you can achieve the same objectives but you just might need to do a few sums on a spreadsheet or whatever.  Interactive Investor will recalculate the % of notional split based on the type of withdrawal that you made.

If you think that’s too much faff, as others have said you have other options like using ISAs or moving your drawdown part to a different provider.

Thanks.  Still trying to get my head around it.  Maybe go with UFPLS next time.

Donewithwork1

Pat38493 said:

Donewithwork1 said:

Linton said:

Some platforms (HL may be the only one) operate a 2 tranch system whereby crystalised funds are held in a separate sub-portfolio), others simply use an overall crystallised % value.

However you can easily have the same effect without having separate portfolios.  It doesnt actually matter that the short and long term funds aren't physically separated.  You can just sell the appropriate funds as needed.

Another way could be to take your full TFLS (or a partial one)and put it in an S&S ISA. Use that for the STMMF fund.  Keep the rest in your global tracker in your SIPP which you use to replenish the 5 year buffer when needed. 

There are many other options along the same lines, the main difference is how you avoid the possible risk of liability for higher rate tax.

Thanks Linton.  If I've got this right the downside with just selling appropriate funds is.... if my current notional split in the first year of DD is, say, 3.5% Crystallised and 96.5 Uncrystallised then I would have to hold a much larger amount in a MMF in my uncrystallised pot in order to be able to take an income of 3.5% from MMF's for that year.

The ISA route is a good idea but that would mean crystallising a lot more to get the tax free cash to put into an ISA which could limit the ability to be able to grow the uncrystallised pot to grow more tax free cash in the future.

Hope that makes sense, starting to confuse myself now lo!!

As Linton explained you keep the same proportion of investments as you always intended, and then you decide which investments to sell to cash when you want to take money out.

Pat38493 I think I read that you use ii.  At the moment all my pot is in cash, but when I decide to buy into a fund/s and then want to crystallise an amount in the future, do I have to sell funds to a cash pot? or do I just select an amount in £££'s to crystallise and then ii do a conversion.  Not really sure how that all works as I haven't done that yet!!

Linton

Donewithwork1 said:

Pat38493 said:

Donewithwork1 said:

Linton said:

Some platforms (HL may be the only one) operate a 2 tranch system whereby crystalised funds are held in a separate sub-portfolio), others simply use an overall crystallised % value.

However you can easily have the same effect without having separate portfolios.  It doesnt actually matter that the short and long term funds aren't physically separated.  You can just sell the appropriate funds as needed.

Another way could be to take your full TFLS (or a partial one)and put it in an S&S ISA. Use that for the STMMF fund.  Keep the rest in your global tracker in your SIPP which you use to replenish the 5 year buffer when needed. 

There are many other options along the same lines, the main difference is how you avoid the possible risk of liability for higher rate tax.

Thanks Linton.  If I've got this right the downside with just selling appropriate funds is.... if my current notional split in the first year of DD is, say, 3.5% Crystallised and 96.5 Uncrystallised then I would have to hold a much larger amount in a MMF in my uncrystallised pot in order to be able to take an income of 3.5% from MMF's for that year.

The ISA route is a good idea but that would mean crystallising a lot more to get the tax free cash to put into an ISA which could limit the ability to be able to grow the uncrystallised pot to grow more tax free cash in the future.

Hope that makes sense, starting to confuse myself now lo!!

As Linton explained you keep the same proportion of investments as you always intended, and then you decide which investments to sell to cash when you want to take money out.

Pat38493 I think I read that you use ii.  At the moment all my pot is in cash, but when I decide to buy into a fund/s and then want to crystallise an amount in the future, do I have to sell funds to a cash pot? or do I just select an amount in £££'s to crystallise and then ii do a conversion.  Not really sure how that all works as I haven't done that yet!!

For the SIPP platforms I use (AJBell, Bestinvest) it is your responsibility to ensure the cash is available in your SIPP account ready for drawdown 1-2 weeks before the monthly payroll run to pay the drawdown. I believe this is normal.

RoysV

Vanguard split the pot into pre retirement and drawdown. If you have more than 1 fund in the pre retirement the default is, apparently, to make the drawdown fund the same percentage split. I just told them on the call where I wanted it to go and it was no problem. I'm only on my first month drawdown but it seems to have been easy enough so far.
I had thought about going with II but for whatever reason I just couldn't get my head round the notional split, obviously a reflection on me and not II 

LHW99

do I have to sell funds to a cash pot?

II SIPP doesn't have a "cash pot" as such. It all stays within the SIPP as a single account,and is listed as available cash on the overview or at the top of the investments page. You get a small amount of interest on the cash amount, depending on how much is there, soat the momentI am using an STMM which is higher "interest" to collect the cash over a year, and will sell what is needed a few weeks before arranging a UFPLS.

Donewithwork1

LHW99 said:

do I have to sell funds to a cash pot?

II SIPP doesn't have a "cash pot" as such. It all stays within the SIPP as a single account,and is listed as available cash on the overview or at the top of the investments page. You get a small amount of interest on the cash amount, depending on how much is there, soat the momentI am using an STMM which is higher "interest" to collect the cash over a year, and will sell what is needed a few weeks before arranging a UFPLS.

Thank you, that's helpful.  Couple of quick questions if you don't mind. 

1)  How do you monitor the interest you receive in the STMMF, does it show as interest as such?  Or just in a higher fund value.

2)  If I did the same and had money in a STMMF how do I 'sell' to cash?  Whats the process?  Or do you know of a link on the ii site to show me?

Thank you.

MallyGirl

Donewithwork1 said:

LHW99 said:

do I have to sell funds to a cash pot?

II SIPP doesn't have a "cash pot" as such. It all stays within the SIPP as a single account,and is listed as available cash on the overview or at the top of the investments page. You get a small amount of interest on the cash amount, depending on how much is there, soat the momentI am using an STMM which is higher "interest" to collect the cash over a year, and will sell what is needed a few weeks before arranging a UFPLS.

Thank you, that's helpful.  Couple of quick questions if you don't mind. 

1)  How do you monitor the interest you receive in the STMMF, does it show as interest as such?  Or just in a higher fund value.

2)  If I did the same and had money in a STMMF how do I 'sell' to cash?  Whats the process?  Or do you know of a link on the ii site to show me?

Thank you.

it just looks like any other fund - no 'interest', it just rises in value. You sell it like any other fund - click on it and press the orange sell button.

Linton

MallyGirl said:

Donewithwork1 said:

LHW99 said:

do I have to sell funds to a cash pot?

II SIPP doesn't have a "cash pot" as such. It all stays within the SIPP as a single account,and is listed as available cash on the overview or at the top of the investments page. You get a small amount of interest on the cash amount, depending on how much is there, soat the momentI am using an STMM which is higher "interest" to collect the cash over a year, and will sell what is needed a few weeks before arranging a UFPLS.

Thank you, that's helpful.  Couple of quick questions if you don't mind. 

1)  How do you monitor the interest you receive in the STMMF, does it show as interest as such?  Or just in a higher fund value.

2)  If I did the same and had money in a STMMF how do I 'sell' to cash?  Whats the process?  Or do you know of a link on the ii site to show me?

Thank you.

it just looks like any other fund - no 'interest', it just rises in value. You sell it like any other fund - click on it and press the orange sell button.

You can also  get STMMF INC funds where the interest is paid into your account as cash.

See https://www.fidelity.co.uk/factsheet-data/factsheet/GB00B3P2RZ52-Royal-London-Short-Term-Money-Market-Y-Inc for example.

LHW99

Linton said:

MallyGirl said:

Donewithwork1 said:

LHW99 said:

do I have to sell funds to a cash pot?

II SIPP doesn't have a "cash pot" as such. It all stays within the SIPP as a single account,and is listed as available cash on the overview or at the top of the investments page. You get a small amount of interest on the cash amount, depending on how much is there, soat the momentI am using an STMM which is higher "interest" to collect the cash over a year, and will sell what is needed a few weeks before arranging a UFPLS.

Thank you, that's helpful.  Couple of quick questions if you don't mind. 

1)  How do you monitor the interest you receive in the STMMF, does it show as interest as such?  Or just in a higher fund value.

2)  If I did the same and had money in a STMMF how do I 'sell' to cash?  Whats the process?  Or do you know of a link on the ii site to show me?

Thank you.

it just looks like any other fund - no 'interest', it just rises in value. You sell it like any other fund - click on it and press the orange sell button.

You can also  get STMMF INC funds where the interest is paid into your account as cash.

See https://www.fidelity.co.uk/factsheet-data/factsheet/GB00B3P2RZ52-Royal-London-Short-Term-Money-Market-Y-Inc for example.

Yes, I use the inc version, as I prefer to choose whether to re-invest there, or in another fund within the sipp.

To buy or sell if you already have some units in a fund, there are dots by the name of the fund. Clicking on them gives you the buy / sell option (plus some others) - same for IT's ETF's etc.

If you don't have any units yet, go to Research at the top, and there is a line at the bottom of the page with a search box and blue button saying Quote. You can search by name, or if you find the ISIN can paste that in and search for it.

The ISIN for the Inc version of the Royal London STMM is GB00B3P2RZ52. I often search on Morning Star first, as I find its search filter a bit easier to use, but the II one does the job if you get used to that.