Temporary partial ii SIPP transfer-out to reduce fees, pre-drawdown....

seacaitch

My partner has a modest ii SIPP that sits under the 100k account size currently but will go over it shortly due to additional contributions. In approx 2 1/2 years, the SIPP will be drawn down quite aggressively to empty it by state pension age.

To avoid the ii platform fee increasing by £9/month when the 100k threshold is surpassed, I'm considering temporarily holding the cash-like part of the portfolio on another platform that's preferably fee-free, while retaining the investment holdings on ii. On current pricing (which can change!), this could save £270 in ii platform fees prior to drawdown assuming the investments total balance remains below the higher fee threshold, which is very likely. Then, at drawdown commencement, we'd transfer the cash-like holding(s) back to ii from the other (fee-free) platform, where the initial withdrawal at ii would bring the balance back below the fee threshold.

I'd planned to use InvestEngine (IE) for this scheme, but now realised they don't permit partial SIPP transfers in. Freetrade (FT) looks like it might be an alternative that could work instead of InvestEngine, and has a transfer-in incentive offer currently, or there may be other platforms I'm unaware of with fee structures that could also work. Note, the whole SIPP can't be transferred to IE or FT since it contains at least one holding unavailable there.

Or, I could take a longer route and partial transfer the cash/cash-like to A.N.Other platform as an interim step, then promptly full transfer that to IE (perhaps incurring some monthly fee at the interim platform, and incurring more hassle, so not thrilled by this option…).

Any input on this proposed "scheme" in general, or suggestions for how to go about it to achieve the fee-saving objective?

MallyGirl

I partially transferred from ii to HL (just under £30k to do 3 small pots) and just left it in cash. I got interest and as far as I can see I was charged no fees. I also got a small transfer bonus

Notepad_Phil

https://forums.moneysavingexpert.com/discussion/comment/81923009#Comment_81923009

I did almost the same process with HL and found it very easy and quick to do. But the OP's partner might not want to keep it in non-invested cash for the two or so years that's mentioned in which case the platform's 0.35% charge is going to hurt, so the OP's idea of then transferring across to IE sounds to be a good thing to do.

NoMore

If I wish to retire, can I drawdown with InvestEngine? – InvestEngine

Not sure if you also intend to use IE for drawdown, or transfer out again, but I would read the above. They aren't really setup for drawdown. Can do it but it sounds a faff.

Its a common thing with all the newer providers. Always check, they tend not to surface this. Personally, its why I wouldn't use any of them if close to taking pension benefits. They are setup really for the accumulation phase.

seacaitch

https://forums.moneysavingexpert.com/discussion/comment/81923094#Comment_81923094

No drawdown on the temp platform - the "cash-like" will be transferred back to ii at drawdown commencement. On the temp platform, the cash would be held in a money market fund OEIC or ultra short term bond ETF, depending on platform.

Triumph13

Would you be able to avoid the fee increase by simply crystallising the SIPP and taking the 25% tax free cash? That can then be parked in an ISA.

seacaitch

https://forums.moneysavingexpert.com/discussion/comment/81923345#Comment_81923345

Good idea! Next year's ISA allowance is already earmarked to be used up, and the subsequent year's allowance will be the reduced 12k which wouldn't be sufficient. But her total amount of unsheltered cash savings might still sit inside the personal savings allowance, or be got into a cash ISA the following year, so no big deal.

I don't think we'll go down this route, but it's a good suggestion - thanks.

bolwin1

Have you taken the tax free cash from this pension ? If so, you won't be able to partially transfer anywhere. It has to go in one block. Appreciate you are using the term drawdown, so that does imply you haven't taken the tax free element. If you haven't, it seems like an unusual policy for InvestEngine to have.

seacaitch

»» "Have you taken the tax free cash from this pension ?" ««

No.

I think I've decided what we'll do:
- today, partial transfer of the cash-like holding to Freetrade (FT); deals with the immediate issue & earns FT transfer cashback
- then later, either transfer the cash-like back to ii in 9+ months time (cashback banked) and take 25% PCLS to stay below the threshold (incorporating @Triumph13's suggestion); or transfer the cash-like back to ii in 2.5 years time (original plan) when drawdown begins and allow first SIPP withdrawal to immediately take the balance back below the fee threshold. Probably the latter, but either of these works, with pros & cons for each.

And adjust the plan if/as the fee landscape changes. Thanks.