Another Q about a using second provider.

retiringin26

I am retiring next spring, three years ahead of SP age and two years ahead of commencing a DB pension from my current employer (where the NPA is 66).

I've three DC pots, one (about £85k) is in an ii SIPP and two with personal pension providers, both about £200k each. One is a Scottish Equitable mixed fund that has been returning on average about 7% compounded pa over the last 15 years with drops for the 'recent' global events like Covid, war in Ukraine, Trumpism tariffs etc. The final DC pot is in higher risk funds with another provider and I want to leave it alone for at least 7-10 years. I'm also already in receipt of a DB pension of about £17k since age 60.

My plan is to bridge the 2-3 years gap from next year up to my DB pension commencement (which will be about £8k, followed by full SP  a year later), using the ii SIPP. That £85k DC pot is in a short-term MMF so earning about 4% currently. I plan to take about £25-30k per year from that MMF, giving me a gross income just under the higher-rate tax allowance. The MMF in the ii SIPP is planned to run down to zero roughly over those three years.

I want to move the Scot Eq £200k pot into my SIPP, so that from age 67 when the MMF fund has been emptied that £200k fund will be a new source of drawdown although at a lower rate of about £5-7k per year to keep my gross income at about £50k. However the £200k is ideally to remain in a modest-risk fund in the ii SIPP (i.e. broadly equivalent to the current ScotEq fund).

ii state that I must have uncrystallised and crystallised pots in the same investment funds, so I'm unclear if I can 'ring-fence' my £85k MMF from my intended £200k medium risk investment, all within the ii SIPP.  My thought therefore is to instead open another low-cost SIPP such as Halifax and put the £200k in there, again ready for drawdown in three years' time. Have I missed something obvious or got my interpretations wrong?

af1963

Unless you take out some tax free cash *without* taking out the corresponding taxable portion, you wouldn't have any crystallised funds.  If you just take regular UFPLS withdrawals ( 25% tax free and 75% taxable) there won't be any crystallised amounts left behind.

EDIT: also, if your objective is to gradually use up the MMF while keeping the other investments intact, you just do that by choosing which investments to sell in order to realise the cash each time you want to draw down. You can do that just as easily within a single SIPP.

Setting up a second SIPP elsewhere will incur extra SIPP charges, on top of the fixed rate within ii.