oh no, its a ‘which SIPP provider’ thread

mrklaw

frustratingly I just found out Fidelity (who I’m with) don’t offer individual gilts. I was planning to set up a gilt ladder for a part of a bridge fund. I could probably work around it, but the point of the ladder was certainty, so relying on an MMF or short/intermediate bond funds isn’t exactly the same.

so I guess the question is ‘which SIPP provider offers individual gilts..’

but I’m less than three years from retirement hopefully, so the question also needs to be “..and is low cost for a mix of gilts and ETFs, and offers flexible and easy to administer drawdown options - I think primarily FAD with the ability to easily take tax free cash using online only if possible, and set up regular crystallised drawdown -again online if possible”

and would you do a full transfer or just use the new SIPP for gilt ladder and keep my equities in fidelity?

DRS1

I can't answer the question(s) but I have another one for you to think about.

If you are going to do FAD that means you will be crystallising the SIPP in instalments and will have some crystallised and some uncrystallised at any given time. Do you care whether the provider uses the percentage split approach (ii for example) or has a hard two account split (HL for example)?

For what it is worth both ii and HL should have individual gilts available (though you may have to phone up for ILGs) but neither will be the cheapest.

Kryten_the_Titan

I hold individual gilts with AJ Bell. If you only hold gilts with AJ Bell the maximum monthly fee you would pay would be £10. It costs £5 to purchase one gilt.

If you only hold ETFs with Fidelity and were to transfer those to AJ Bell, the monthly fee with AJ Bell would remain £10 a month; gilts and ETFs go under the same fees umbrella. OEICs on the otherhand are charged at a different rate and the fees can soon mount up (but cheaper then Fidelity).

I think using AJ Bell for gilts is a feasible idea. The gilts coupon payments could be used to pay for the monthly fees. If you have a surplus of cash from coupons after paying fees you could buy an ETF as part of a regular investment plan; AJ Bell no longer charge for regular investing plan. When doing a regular investment the investment purchase is only made if there is enough cash to cover the set limit to invest.

May be this can work for you?

Kryten_the_Titan

https://forums.moneysavingexpert.com/discussion/comment/82050866#Comment_82050866

Oh yes - and you have what @DRS1 said to consider. AJ Bell fall in to the % split method (which could be a pain for DD but not for UFPLS.)

I had wondered whether it possible to transfer cash from AJ Bell or Ii (following gilt redemption) to another provider (preferred choice for drawdown eg Fideility) so the drawdown can be completed using their split account method.

Roger175

I use AJB and am about to buy my own gilt ladder, probably this week.

Been with AJB for many years now and really can't fault them, Have been receiving pension payments for the last two years using UFPLS method and so far it has been faultless.

mrklaw

https://forums.moneysavingexpert.com/discussion/comment/82050867#Comment_82050867

the online gilt ladder tools use the coupons as part of the annual balance creation. I don’t know if its possible to turn that off. I can keep cash in there for fees like I do now in Fidelity. I can read up more on AJ Bell on how they handle drawdown too.

to @DRS1 point - I’d prefer to be able to select the funds to crystallise but it might not be a dealbreaker - assuming they at least limit to ETFs? I wouldn’t want them touching the gilts or cash for instance. In that case I might split out two SIPPs if the two funds have separate enough jobs..

mrklaw

Hmm

https://forums.moneysavingexpert.com/discussion/comment/81667023#Comment_81667023

reading this - it suggests AJB even crystallises cash. So in that case if I had eg 100k gilt ladder and 900k in equities - and took 10% out using FAD, it’d also crystallise 10% of my gilt ladder? that seems like it’d mess things up?

if so, would opening an AJB SIPP solely for a gilt ladder be an option? I’d rather not have more pensions than needed, but once I retire I’ll transfer my workplace into Fidelity so I’d only have two - one for my equities and one for my gilt ladder.

Fidelity also seem to not do this ‘total portfolio’ crystallisation although wouldn’t matter if they were separated. Do they also allow me to do phased drawdown? eg crystallise 50k and take the taxable over 12 months?

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82051032#Comment_82051032

Hopefully someone who has done it will be along to explain but I think if you are crystallising 10% of the pot with AJBell they will expect you to turn at least the TFC into cash in advance (as that is what you draw first) and then as and when you draw the taxable pension payments that you would encash some of your investments so they can pay you the cash. So I think it is up to you what you cash in. I am not sure what they would do if you hadn't got enough cash to cover the amount you want to draw - presumably ask you what you want to sell.

By contrast with HL I think you need to designate what assets are going in the drawdown pot. So you can have different assets in the drawdown pot from the assets in the uncrystallised pot. In your case you could have the gilts in the uncrystallised pot and the ETF in the drawdown pot.

As it happens I think people would tend to have growth assets in the uncrystallised pot and more cautious assets (or even just cash) in the drawdown pot.

The point about the percentage split versus hard split is that it may affect what amount of TFC you can take. So say you have the growth assets 900k and the cautious assets 100k. You crystallise 10% of the pension (100k). With the hard split you can say the 100k of cautious assets go to the drawdown pot and the 900k growth assets stay in the uncrystallised pot. Lets says you take £25k of TFC so 25k of the cautious assets are sold leaving 75k in the drawdown pot. A year later the 75k has grown to 77k and the 900k has grown to 1mill. The TFC you can take from the !mill is 250k (OK it isn't because when you add on the 25k you have already taken that puts you over the Lump Sum Allowance but let's ignore that). But the point is with the hard split you look at the assets in the uncrystallised pot to work out the TFC.

If you are in a percentage split pension though with the same assets and the same growth figures you can't take £250k TFC. The uncrystallised part is 90% of the overall pension. The overall pension is now 1077k. Multiply that by 90% and then by 25% gives you TFC of 242,325. Happily that would keep you under the LSA!

I will admit I may have got the percentage split calculation a bit wrong - I am not entirely sure how they deal with you taking some of the 77k out of the pension in the intervening year.

mrklaw

but that linked post (and the entire thread) suggests that AJB treats the entire pot as one thing for calculating whats crystallised and what isn’t? Its slightly making my head hurt. In particular I would not want 25% of my TFC coming from the gilts. I suppose ultimately its a semantic difference and the actual practical difference is that a small portion of my gilt returns would be taxable at 20% rather than 15% on drawdown. I could accommodate that perhaps with adjusting the maturity value but that won’t be fully accurate either if I don’t know how much TFC I’ll take.

for a general fund if you’re doing a total portfolio returns approach to withdrawals it likely doesn’t matter. but for a specific, fixed return option like a gilt ladder it feels like you would explicitly want that ringfenced which AJB doesn’t seem to do.

the alternative would be to use AJB just for the gilts and keep equities and possibly cash in Fidelity but then you’re having two sets of fee caps rather than one

DRS1

but that linked post (and the entire thread) suggests that AJB treats the entire pot as one thing for calculating whats crystallised and what isn’t?

Yes That is the pension stays as one pot and the crystallised/non crystallised bits are just found by applying a percentage split to the whole pot.

But I don't think that means that when you take your TFC you have to take it proportionately from every asset in the pot.

In particular I would not want 25% of my TFC coming from the gilts.

I confess I am not wholly clear on what you mean. I had imagined that with a gilt ladder you would have a gilt maturing at a point in time generating an amount of money and then you would draw that money out of the pension with some of that being treated as TFC and the rest as taxable pension. Wouldn't that get you the 15% tax on the gilts returns that you want? I am sure I am missing something.

I believe there are other providers which do the HL hard split approach if you wanted to keep everything in one place.

Duggo

joined A j bell this year, and started withdrawing from my sipp. Been very happy with them.