Taking HL draw down

Baldytyke88

I have started the process, but it didn't complete.

Moving from an Hargreaves Lansdown SIPP to drawdown. I assume that you can hold shares in a drawdown account, just like a SIPP. Can shares be moved from a SIPP directly into a drawdown account, without selling the shares?

Is a drawdown account very similar to a SIPP, where you have cash and shares, you can buy and sell and withdraw funds when required?

ColdIron

Baldytyke88 said:

Moving from an Hargreaves Lansdown SIPP to drawdown. I assume that you can hold shares in a drawdown account, just like a SIPP. 

Yes

Can shares be moved from a SIPP directly into a drawdown account, without selling the shares?

I'm not sure, my SIPP was all cash as I had just transferred to it. You certainly will have to if you want the tax free cash or UFPLS

Is a drawdown account very similar to a SIPP, where you have cash and shares, you can buy and sell and withdraw funds when required?

Yes

You will have two accounts,a SIPP and a SIPP Income Drawdown. They work in pretty much the same way as each other. You can take ad-hoc payments but most would set up regular payment instruction, monthly, quarterly etc

disgruntled1234

I've taken a couple of small tax free amounts from my Hargreaves SIPP and both times, I was asked which funds I wanted the remaining 75% to come from and each time, the shares simply "moved across" from my SIPP into my drawdown account, so nothing was sold, other than the amount I wanted to withdraw tax free.

dunstonh

Is a drawdown account very similar to a SIPP, where you have cash and shares, you can buy and sell and withdraw funds when required?

A "drawdown account" is just marketing (or perhaps what is what you are calling it).

Effectively, your SIPP could be made up of different segments, 
The most common are Uncrystallised, Crystallised, and Beneficiary Drawdown

Others are less common, such as capped, protected scheme age, protected TFC, and disqualifying pension credit

Uncrystallised funds are funds for which the tax-free cash is available.  Crystallised is where the tax-free cash has been taken.

The pension will show either the total value with a percentage showing how much is in each or more commonly nowadays, it will show each segment individually.  

When you crystallise a pension, the investments on the 75% element are transferred in situ.   They are not sold.

jaybeetoo

The drawdown account is not just marketing.  They are two separate accounts.  If you have investments in a HL SIPP and a HL drawdown SIPP, they charge you two lots of fees!  I moved all my investments from the SIPP to the drawdown SIPP.

Baldytyke88

jaybeetoo said:

The drawdown account is not just marketing.  They are two separate accounts.  If you have investments in a HL SIPP and a HL drawdown SIPP, they charge you two lots of fees!  I moved all my investments from the SIPP to the drawdown SIPP.

Yes that is what was confusing, it was asking what to transfer, it might have been better to say all.

Albermarle

jaybeetoo said:

The drawdown account is not just marketing.  They are two separate accounts.  If you have investments in a HL SIPP and a HL drawdown SIPP, they charge you two lots of fees!  I moved all my investments from the SIPP to the drawdown SIPP.

. In legal/tax terms, you either have an uncrystallised pot ( where no tax free cash has been taken) or a crystallised pot where the tax free cash has been taken, and any more withdrawals are potentially taxable. 

Some providers like to call the latter a drawdown account. It probably rolls off the tongue a bit better.

You will be charged two lots of fees, but the total fees will be the same as before. eg

£100K uncrystallised pot at 0.45 % = £450 pa

Take £10K tax free cash and you are left with ;

£60K uncrystallised at 0.45% = £270
£30K crystallised at 0.45% = £135 

When I crystallised some of my Fidelity pension pot ( very similar provider to HL) they asked if I wanted to keep the same investments in the crystallised part as the original uncrystallised, or change them. 

BobR64

Albermarle said:

You will be charged two lots of fees, but the total fees will be the same as before

I don't know if this will necessarily be the case with HL. I don't know what their rules are once you go into drawdown as I'm not there yet but, depending on what sort of holdings you have, normal annual SIPP fees can be capped at £200. This applies if you hold only shares, ETFs etc rather than OEIC funds. So I guess that it might be the case that the drawdown fund could have its own £200 annual cap and it could be the difference between £200 and £400 annual fees.

phlebas192

BobR64 said:

Albermarle said:

You will be charged two lots of fees, but the total fees will be the same as before

I don't know if this will necessarily be the case with HL. I don't know what their rules are once you go into drawdown as I'm not there yet but, depending on what sort of holdings you have, normal annual SIPP fees can be capped at £200. This applies if you hold only shares, ETFs etc rather than OEIC funds. So I guess that it might be the case that the drawdown fund could have its own £200 annual cap and it could be the difference between £200 and £400 annual fees.

That's right. The fees will be the same if you only invest in OEICs but with HL could be substantially more if you are invested in shares or ETFs. For platforms that apply a notional split to uncrystallised / drawdown (eg AJ Bell and ii) then the fees will always be the same.

BobR64

phlebas192 said:
 

That's right. The fees will be the same if you only invest in OEICs but with HL could be substantially more if you are invested in shares or ETFs. For platforms that apply a notional split to uncrystallised / drawdown (eg AJ Bell and ii) then the fees will always be the same.

It's actually the other way round with HL. Share-like holdings can be substantially cheaper because of the £200 pa annual cap. Once your SIPP is above £44,444.44 it starts being cheaper to hold it all in ETFs rather than OEICs.

So there might not be any difference between the fees across two accounts if everything is held in OEICs but there is a good chance you will be paying more than if you were holding ETFs even if the £200 cap applies to each account separately.

Furthermore, I have realised that even if you hold everything in OEICs, there is still a possible difference in charges when comparing two accounts with a single one because the charging structure tapers. Up to £250k it is 0.45% and between £250k and £1M it is 0.25%. Therefore if, for the sake of argument, you split a £500k pot into two, you would pay 0.45% on the whole lot rather than potentially paying 0.25% on some of it.

Albermarle

BobR64 said:

Albermarle said:

You will be charged two lots of fees, but the total fees will be the same as before

I don't know if this will necessarily be the case with HL. I don't know what their rules are once you go into drawdown as I'm not there yet but, depending on what sort of holdings you have, normal annual SIPP fees can be capped at £200. This applies if you hold only shares, ETFs etc rather than OEIC funds. So I guess that it might be the case that the drawdown fund could have its own £200 annual cap and it could be the difference between £200 and £400 annual fees.

Ok good point.
I am with Fidelity, and they have an ETF / shares / IT cap of £90 over the whole platform, so I suppose I was basing some of my comments on that.