HL SIPP - Inundated by Drawdowns?

leicestersq

Does anyone else have this same problem?

I have just started to draw my pension from HL. I am going to have to rely on this mostly until I hit the state pension age. First withdrawal was a difficult process for me to follow, but things are when you do them for the first time. But it did at least go through quickly once I had done my part.

The drawdown process is that you put in a request to take money out of your SIPP. That request goes to HL and they then process that manually. Odd in the modern world of computers that there is a manual step, but at least it makes things a bit more secure. My request was to take about a months income out, and I was planning to do that each and every month. There appears no way to do this automatically, meaning I have to create a new request each month, but that isnt a big problem for me.

I noticed that this request when it was sent to HL was dealt with pretty quickly, within a day or two. I saw that a quarter of the money (tax free) appeared in my bank account and the remainder went to a drawdown account. I then found out that in order to get the full amount you withdraw from the SIPP into your bank, you need to put in another request to withdraw the money in the drawdown account to your bank. If that request is made before the 17th of the month it will be processed, but if you miss it then you have to wait a whole month. That second withdrawal is more complicated as that portion of the drawdown is subject to taxation. After they work out the tax and deduct it, they pay you the remainder on the 28th of the month.

Having stumbled through this two stage process and learned, I thought that this month I would be equipped to run through this much more quickly. So I put in my request at the start of the month to move some of my SIPP into drawdown. I wanted to make sure that the first stage of the process completed well before the 17th of the month deadline. But after a few days had passed I noticed that the request hadnt been processed.

I called HL to find out why given that they processed this much more quickly before. I was told that they have been inundated by drawdown requests because everyone is petrified that they are going to lose value in their SIPP due to tax changes in the budget. And yes, it is true that certain tax changes could mean people losing tens of thousands in real value if the happen. I dont know what Labour will do, I just wanted to drawdown my small monthly income, but I now appear to be stuck behind a great big queue of people who are panicking (rightly or wrongly). 

This is a big problem for me, because I need to have this income. According to HL, they say that they will process the request with 20 days. I didnt realise that was the lead time, my first experience of the process was that it took a couple of days and was no big deal. Now it is a big deal because if that drawdown step doesnt happen before the 17th I will have no income for December and Christmas.

Am I the only one to be stuck like this?

And do you think that it is right that HL has a drawdown process that can take 2 months to complete under these circumstance? I am only trying to withdraw cash from my SIPP, not illiquid assets. Am I being foolish for expecting to drawdown my money as and when I need it in monthly chunks?

And what about the great rush to drawdown? Given the delays I am experiencing, there must be huge numbers of people all trying to drawdown their pensions at once. I know that the Inland Revenue has stated that they will be unable to put their cash back into the tax wrapper of a SIPP after they have taken the money out, but that has been little deterrent to people taking out their money.

Whatever happens next in the budget is bad for someone. Either you will have made a mistake not drawing down your pension, or you will have lost a huge amount by drawing it down prematurely and taking it out of a tax wrapper. What a mess.

And no Christmas for me.

SVaz

My Wife sent them a secure message requesting a £350 monthly payment from her drawdown pot - it’s as simple as that and it carries on until you either ask them to stop or there is no more cash in the pot. 

The form filling is only when you want another chunk of tax free cash, with the other 75% going into the drawdown pot.  Which you only need to do once a year if that method is your preference. 

flaneurs_lobster

I assume I am typical but my drawdown has been set up as a recurring monthly payment. 

This has been running for a couple of years and I've assumed that if I want to vary the monthly amount or take a one-off payment then the process will be as convoluted and manual as setting up the original process.

There's no online access to even request such an action, all such must be by phone or mail.

It's with Standard Life, don't know if others have a process that differs markedly.

leicestersq

SVaz,

Alas my drawdown pot is empty. The hurdle I am having trouble jumping is getting money from the SIPP into the drawdown pot. I want to leave my money in the SIPP until just before I need it because of the tax wrapper protections.

If I had foreseen my current predicament, maybe I would have drawndown a larger amount and taken the hit from not having the asset in a tax wrapper. That said if you had told me that the whole process from SIPP to bank account would take possibly 2 months just a month ago, I wouldnt have believed you.

leicestersq

flaneurs_lobster said:

I assume I am typical but my drawdown has been set up as a recurring monthly payment. 

This has been running for a couple of years and I've assumed that if I want to vary the monthly amount or take a one-off payment then the process will be as convoluted and manual as setting up the original process.

There's no online access to even request such an action, all such must be by phone or mail.

It's with Standard Life, don't know if others have a process that differs markedly.

flaneurs,

It sounds like your drawdown method is the one I would choose if I could. I would like to take a set amount from the HL SIPP each month and let the system take the strain. Of course if I had no cash to drawdown it would stop, no problem with that. Also I might need to vary the size of the drawdown as you have mentioned. But an automated drawdown would be my choice.

Alas it seems that you cannot do this with HL. I must admit to being a bit surprised that the option doesnt appear to be available (maybe it does but I have missed it). If it was available I would set it up right away.

I would guess that part of the problem here is that organisations like HL have to protect their customers from scams. Perhaps a manual check of each drawdown to make sure that they look ok is reasonable? 

jaybeetoo

HL has fallen behind and a lot of its processes are manual or they have (poorly) amended existing systems to do what they’ve weren’t originally designed for.  You could crystallise enough money/investments for a year of drawdown taking the tax free lump sum and putting it in a cash ISA and drawing 1/12 of it each month.  Meanwhile set up an automatic monthly withdrawal every month from your drawdown account. Repeat each year.  Be aware that HL holds crystallised and non-crystallised funds in separate accounts so you could find your total SIPP charges increase.  Some other providers, such as ii, hold them both in one SIPP account so it can work out cheaper.

dunstonh

 My request was to take about a months income out, and I was planning to do that each and every month.

That is not the ideal way to do it.  Unfortunately, most DIY platforms do not support monthly UFPLS, whereas most intermediary platforms do.   Some of the intermediary platforms have a DIY offering and offer regular UFPLS.  So, a provider change may be better for you.

I called HL to find out why given that they processed this much more quickly before. I was told that they have been inundated by drawdown requests because everyone is petrified that they are going to lose value in their SIPP due to tax changes in the budget. And yes, it is true that certain tax changes could mean people losing tens of thousands in real value if the happen. I dont know what Labour will do, I just wanted to drawdown my small monthly income, but I now appear to be stuck behind a great big queue of people who are panicking (rightly or wrongly). 

All providers are running slow at the moment.  Some more than others.  And yes, it is down to people scared of losing the 25% even though the Treasury have confirmed it is not changing.

This is a big problem for me, because I need to have this income. According to HL, they say that they will process the request with 20 days. I didnt realise that was the lead time, my first experience of the process was that it took a couple of days and was no big deal. Now it is a big deal because if that drawdown step doesnt happen before the 17th I will have no income for December and Christmas.

This is poor financial planning on your part.    Drawdown transactions can take as little as 20 minutes or as long as a month.  You should not rely on ad hoc withdrawals each month without having a cash float available.

And do you think that it is right that HL has a drawdown process that can take 2 months to complete under these circumstance? 

2 months would not be considered unreasonable for an ad-hoc drawdown during peak times.  Although up to 1 month is more typical.   Not all providers have a daily payroll.   Some are limited to as little as one per month (less common nowadays).

Most providers are talking about a week or two extra delay.    Some are handling it within capacity but it tends to be the more modern software providers that are.  I just keyed one in and the money will be there within the hour 

March is another month when delays occur.

singhini

jaybeetoo said:

HL has fallen behind and a lot of its processes are manual or they have (poorly) amended existing systems to do what they’ve weren’t originally designed for.  You could crystallise enough money/investments for a year of drawdown taking the tax free lump sum and putting it in a cash ISA and drawing 1/12 of it each month.  Meanwhile set up an automatic monthly withdrawal every month from your drawdown account. Repeat each year.  Be aware that HL holds crystallised and non-crystallised funds in separate accounts so you could find your total SIPP charges increase.  Some other providers, such as ii, hold them both in one SIPP account so it can work out cheaper.

Thanks, i didn't know that. I'm thinking of consolidating around 4 pensions pots into one (H&L, Standard life, Aviva, Phoenix Life) so will need to look into these types of costs. 👍

GunJack

It sounds like the issue is because you're using UFPLS rather than having taken the 25pct upfront and crystallising the rest of the pot into the drawdown pot, which would have let you set up the recurring automated payments. 

eastcorkram

In the case of HL, is it possible or not, to set up a monthly withdrawal from a drawdown pot, providing that there's a sufficient cash balance?
I'll be needing to do this early next year. 

Albermarle

eastcorkram said:

In the case of HL, is it possible or not, to set up a monthly withdrawal from a drawdown pot, providing that there's a sufficient cash balance?
I'll be needing to do this early next year. 

Yes it is possible and this is the way the OP should have done it.