Any downsides to AJ Bell as a ‘one SIPP’ for retirement drawdown?

mrklaw

I currently have three DC pensions

• workplace pension - Royal london
• old frozen pension with Aviva that won’t let me consolidate as it has some benefits I can’t find out and anyway its only £18k (quite annoying honestly)
• SIPP with Fidelity

currently I do partial transfer from RL to Fidelity which is where most of my funds are held. When I eventually retire I’ll transfer fully and close the RL pension.

Today I opened an AJ Bell SIPP because I want to buy a gilt ladder and Fidelity don’t offer that. Looking at their funds and fees though, it looks like I could potentially switch to using AJ Bell entirely. ETF fees are capped at £120 a year, and they offer all three of the funds I’m in with Fidelity - VWRP, CSH2, IGL5. so consolidating to a single platform would save me paying double fees

looks like they offer monthly FAD as well which could be valuable when setting up drawdown in retirement. At minimum I’d use that with the gilt ladder which is designed to provide a top up during the bridge to state pension as a monthly income which in theory should be less admin both from a ‘get paid like a salary’ pov as well as HMRC tax simplicity.

is there anything I’d be particularly missing from switching away from Fidelity? if AJ Bell is fine as a simple to administer platform for managing funds and drawdown, I might start by switching my RL partial transfers to it, which would leave Fidelity holding VWRP - and then transfer that at a later date.

Linton

Mrs L is with AJBell. There have been no problems - withdrawals have been handled quickly and efficiently.

Holding a gilt ladder in a SIPP may not be the best option if you can avoid it….

It results in an income tax liability on the full amount withdrawn which can be avoided by holding it elsewhere. There is no tax in an ISA . In a GIA there is no tax on the capital gains from a collapsing ladder and your Personal Savings Allowance is available for the interest.

An automatic monthly FAD may not be as helpful as it sounds since (AIUI) it is your responsibility to ensure there is cash available in the account well before each withdrawal is due. Mrs L just withdraws a lump sum perhaps once a year.

mrklaw

its all inside a SIPP - surely it matures into cash inside the SIPP uncrystallised and then I just move that years amount into drawdown - take the 25% tax free, take the rest as monthly FAD taxed at 20% - like any other pension asset?

why would the income tax liability be any different to other wrappers or other funds inside a SIPP? To be clear the money already exists inside pension wrapper - all of my contributions and most of my savings is in pensions as I’m at access age (55 now)

kermchem

Not sure I can offer any downsides, only a positive view of A J Bell, but I can identify some things to be aware of.

Gilt ladder - I have a dealing account (General Investment Account) with AJB holding some gilts, but not as a ladder. Buying was online and easy. Some gilts first issued in 2025 are not listed on their platform, so could possibly require a phone call to purchase.

My SIPP is currently in drawdown. I moved to AJB a decade ago from a FSAVC invested in a with-profits plan - was perhaps a good idea in 1992, but not in 2016. During the accumulation phase AJB was simple, pay some money in each month by direct debit, set up a regular investment to buy some ETF or IT using those funds and the tax relief (from the money paid in 2 months earlier). Reinvest dividends. Can be set and forget and run with little input.

I took VS and retired earlier this year. Main DB pension is USS - which is a DB/DC hybrid and the forms ask a lot of questions to ensure you are not being scammed, and to work out what fraction of tax-free limit you have already used for other pensions, i.e., irrelevant questions. AJB SIPP is providing 6 year bridge to SP. I have chosen to convert roughly a sixth of SIPP to drawdown each year. AJB forms are equally long and ask how much tax-free cash you have already taken, and would not accept a date for another pension lump sum withdrawal in the future. So, I completed the AJB forms on the day my USS pension began, 1st May. It might be a more general issue for those with multiple pensions, but I am not sure how easy it is to fill in paperwork for pension 2, whilst pension 1 is processing.

Timeline - I completed AJB forms on 1st May to convert part of SIPP to drawdown. The 25% tax free lump sum arrived in my account on 8th May. Winner, and there is a bank holiday weekend in there! By contrast AJB run their payroll to make monthly payments on 10th of each month. I was too late for 10th May payment.

Tax - easy really so long as you know how PAYE works. My former employer passed my P45 to USS, and correct tax code was applied by USS. First AJB payment on 10th June was deliberately less than £12570 / 12, and so was un-taxed. HMRC then issued BR code to AJB for 10th July, etc., and the underpaid tax from first AJB payment fixed by a revised tax code to USS.

BACS and payment - my former employer paid me penultimate working day of each month, so early if there was a weekend or bank holiday. USS pays my DB on 21st, again early if there is a weekend. AJB pays by BACS with payroll running on the 10th. BACS takes three working days, including payroll day and payment day, so the best is money in your account on 12th. Now if Good Friday is 10th April …

Decumulation - one needs to have cash funds in SIPP each month just before 10th in order to get paid.I don't yet know what happens if you don't. But, by comparison with the easy process to accumulate, there are no tools to sell in an automated way. Less of a problem if using a gilt ladder.

Customer service - no idea, I have only ever needed to use standard online processes that might have a human at the other end, but I have never needed to phone or e-mail.

Linton

https://forums.moneysavingexpert.com/discussion/comment/82088237#Comment_82088237

The difference is that gilts have their own tax benefits, it seems a pity not to take advantage of them.

If you hold the Gilt ladder in a SIPP you need 20% extra gilts to provide the same income. Perhaps this 20% could be better invested in long term growth.

But like all retirement planning it is highly dependent on your personal circumstances.

Albermarle

I think with Aj Bell for drawdown it is your responsibility to make sure there is enough cash in the account to make any payments. If they have to sell investments to get the cash they charge you ( or they did) . AFAIK , Fidelity do not charge you if there is insufficient cash and they have to sell investments for you.

mrklaw

https://forums.moneysavingexpert.com/discussion/comment/82088309#Comment_82088309

I’m really confused and a little nervous about this. I have money already in a SIPP. I can’t pull it out just to put into gilts. I want gilts for certain nominal returns on maturity - which I think I’ll get right? I understand they’re CGT free except for coupons so they are effective if in a GIA, but I don’t have a GIA so htats not relevant for me.

what do you mean I need 20% more to get the same amount? Surely I get exactly the same return as I would from a GIA or ISA - I buy £100 I get coupons and get £100 on maturity. I don’t pay tax in the SIPP I wouldn’t pay tax in a GIA - they’re the same. In fact the SIPP would be better as I have more money in there from tax relief.

I’m hoping I’m misunderstanding the point you’re making because I’m struggling to understand why it would be less effective in a SIPP for the job I want it to do. I have £x and I want £y per year for 9 years. full stop.

mrklaw

https://forums.moneysavingexpert.com/discussion/comment/82088320#Comment_82088320

I would be planning to review the cash balance (or more likely any cash will be pushed immediately to CSH2 or similar) - so my FAD will be reviewed against that. Target is to generate 10k per year gross so I’ll check its above that, then crystallise 10k - taking 2.5k TFC and dropping into an ISA, then the 7.5k monthly via regular FAD.

should be ok I think? I’ll be super careful each year setting it up.

Dead_keen

One of the issues with having all your pension with one provider is that is something goes wrong with their admin systems (see TSB IT failure, JLR cyber attack, etc) then you may have some issues.

Also with a SIPP that is not crystallised can split it and send bits and pieces to other providers. And the other providers are happy to look after it. You can't (under HMRC practice that I checked a couple of years ago) split a fund in drawdown and move part to someone else. It has to be all-or-nothing. And some providers won't accept a fund in drawdown. Not a huge issue but it might be worth knowing about.

hara____

https://forums.moneysavingexpert.com/discussion/comment/82088392#Comment_82088392

Don't worry about this. Linton was only making the standard point that if you are tight for space in ISAs and SIPPs then individual gilts can be held outside of them very tax efficiently.

If you know you want to withdraw from your SIPP at a specific time, and most of your assets are already in tax wrappers, then there's absolutely nothing wrong with using a gilt ladder in your SIPP.

mrklaw

https://forums.moneysavingexpert.com/discussion/comment/82088417#Comment_82088417

interesting. Maybe for now I stick with AJ Bell for bridge funds that have a job, and leave Fidelity with the equities - I think its £90 per year for Fidelity capped so not too bad to keep flexiblity