Drawdown - finer points.

squirrelpie

One thing to be aware of with HL's arrangement is that they treat the SIPP and the drawdown pots separately in terms of fees. So if you're using exchange-traded investments in both pots then you could pay £400 a year instead of £200. But they don't charge for cash held in the drawdown pot, and do pay interest.

Linton

AJBell use the % crystallised method.  There is only one investment pot and a % crystallised figure is recalculated each time you pay money in and out.

Veloflyer

  HL do seem to be increasingly expensive compared with Bell. Thoughts welcome......

MallyGirl

It depends on the value being held. HL are known to be a bit expensive and charge a percentage. I am with Interactive Investor as they charge a fixed fee that is much cheaper than the percentage based  providers would charge 

DRS1

Veloflyer said:

  HL do seem to be increasingly expensive compared with Bell. Thoughts welcome......

One of the complaints about HL is that they charge separately for the SIPP and the SIPP Drawdown accounts so you could potentially be paying double the fees.

However some people much prefer the HL approach of keeping the assets of the two accounts separate so that they invest differently in the two.

Jerben

I have the money in the HL Drawdown pot in cash, so pay nothing in charges for this pot.
No real point in ‘investing’ it as it is due to be withdrawn in the short term (1-2 years).
It earns a bit of interest, (currently about 3%), 

SVaz

I’m still getting 3.4% in a Short term money fund, that’s taking the 0.45% fee into account. 

If it was in cash,  it’s 2.8% with no fee. 

It’s less than £100k though,  for more than that it’s probably worth just holding cash.

Apparently AJ Bell charge for holding cash alongside investments and only pay 2.3%  (2.05% after the fee) . 

I don’t know if they charge when the whole Sipp is cash though? 

FIREDreamer

NoMore said:

Veloflyer said:

Yes - I assume there would be 2 separate accounts set up within the SIPP. 1 for the existing invested SIPP, another for whatever I have transferred to drawdown - essentially the crystallized bit.

Note not all providers do two separate pots for crystallised and uncrytalissed instead they do notional split whereby a percentage of your whole pot is assigned as crystallised. I do not know how a bell or hl do it but something to be aware of. 

Hargreaves have two pots.

A J Bell have a combined pot.

badger09

I found this thread really useful and have a follow on question. I have a small SIPP (below £100k) with HL and plan to take the tax free lump sum before 5/4/26 to replace money withdrawn from ISA & gifted to my son. So effectively gifting from SIPP, with increased IHT on horizon. 

I will have to move it all into Income Drawdown account. 

Can my investments be moved ‘in specie’ or do I have to sell all to cash, xfer to Drawdown, then rebuy, incurring more charges? I know I’ll have to sell enough for the TFLS. 

I’m also considering further regular withdrawals, up to BR tax limit, mainly for gifting (not claiming gifts out of surplus income) Is this madness? 

Thanks

SVaz

They just move over to a drawdown account as existing funds,  as you say - as long as you have enough in cash for tfls and fees then that’s all you need.
You can still contribute to the Sipp account and either leave in cash/STMM or invest it.