oh no, its a ‘which SIPP provider’ thread

mrklaw

https://forums.moneysavingexpert.com/discussion/comment/82051728#Comment_82051728

right - what I want is eg buy £10000 of a gilt maturing in 2030 etc - then in 2030 I get £10000 deposited into cash which I can then drawdown.

but if I’ve previously taken tax free cash (I plan to boost my wife’s SIPP with TFC along with possibly finishing off my mortgage); then if I can’t control which funds get crystallised and its done across the entire portfolio, won’t I potentially end up with a smaller % of that £10000 because the fund thinks I’ve taken some of it as TFC already - and I’d be taxed at 20% on any portion tagged as crystallised.

I think I’m leaning towards an AJ Bell account solely as the gilt ladder vehicle and keeping my equities elsewhere just for simplicity of my brain to separate the two

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82051881#Comment_82051881

OK I think I see what you mean. You would really be happier with the hard physical split of assets approach. Using AJBell for only the gilt ladder will give you that insofar as the actions you take in the other pension will not have any impact on what you do with the gilts ladder or how it is taxed when you take it (unless of course you do actually start knocking on the door of the Lump Sum Allowance).

phlebas192

https://forums.moneysavingexpert.com/discussion/comment/82051881#Comment_82051881

The split between uncrystallised & crystallised with AJB is just a book keeping exercise. It doesn't impact on your investments at all. Any cash you withdraw requires you to sell sufficient assets to generate that cash (if there isn't already enough), but it's your choice which are sold.

As an example & using some of the figures you've given in this thread. Suppose you have a SIPP of £1m with £900k in equities, £100k in a gilt ladder and no cash. It is 100% uncrystallised. You choose to crystallise £100k of it, take the £25k tax free lump sum and keep the rest of the crystallised amount in the SIPP. You choose to sell £25k worth of equities to fund the TFLS.

You are crystallising 10% of the SIPP so you now have 90% (£900k) uncrystallised and 10% (£100k) crystallised [nb: ignore that these equate to the initial equity / gilt amounts, that's just coincidence]. But you are taking the £25k TFLS which comes out of the crystallised part. So you now have £900k uncrystallised (92.3%) and £75k crystallised (7.7%). But the underlying portfolio is still £875k equities and £100k gilt ladder.

A few months later the equities have increased in value to £950k and the gilt ladder is still worth £100k. You have also accumulated £10k in cash from dividends and coupons = .£1,060k total value. The % split remains the same: 92.3% uncrystallised, 7.7% crystallised so that is now £978.38k & £81.62k respectively.

You decide to withdraw the £10k cash. That comes from the crystallised portion so the split is now £978.38k uncrystallised (93.2%) and £71.62k crystallised (6.8%). Your assets are now £950k equities and £100k gilts.

You will see that in none of this is the gilt ladder impacted.

mrklaw

ah so you can choose where the TFC is pulled from so as long as I choose non-gilt funds that should be unaffected? ok that sounds better. the crystallised percentage takes the entire portfolio but the TFC choosing the source effectively defines which funds are in the crystallised pot?

is cash from coupons/dividends always crystallised? If I’d taken no TFC from the start would it still be? Thats a separate question though.

mrklaw

tried AJ Bell CS. The AI bot tried to help but kept spouting the same ‘whole pot’ stuff over and over. Spoke to a real person that evnetually helped.

Me: can you give an example how it might look when you go through drawdown? like if I have funds A/B/C would it say ‘which fund to sell’ - and do I choose only one? sorry its just I’m looking to transfer into a SIPP ready for drawdown so how it works in retirement is important to clarify

AJB: So for example you hold 3 funds if you sell down from one for example £25,000 and take this all tax free then £75,000 will go into drawdown. This doesnt need to be sold from your investments and will essentialy go into a pot where you can take taxable income from. In regards to your investments this wouldnt change you would only need to sell the amount you are wanting to for the withdrawal.

Me: so.. what ends up crystallised doesn’t matter? just a % of the pot? And when I choose to draw from the crystallised portion I choose the fund again at that point? So eg 75k of ‘something’ gets marked crystallised, and so 75k of drawdown can be chosen from any of the funds up to that amount?

AJB: Yes this is correct

I think this helps me get my head around it. so you choose at the time of drawdown and the crystallised amount is just an amount you have available to take. Assume thats simpler as its a hard amount although don’t know what happens if funds fall in value.. Might be enough to bring everything under AJB but migth start with the ladder first (still have to wait a while with fidelity for the cashback holding period)