Opening 'back up' SIPP

spg1

I have an ii SIPP which I'm planning to start drawdown from now year.

As this will be my only source of income until SP starts in 7 years, I'm looking to reduce the risk of say a cyber attack impacting on platform access (the M&S one was worrying).

I think it makes sense to have a second SiPP which I could access if needed.

My thinking is to put the growth part of my portfolio (which is in ETF trackers) into this new SIPP and leave the rest in ii which I'll drawdown from.

I'm guessing it's easy enough to transfer funds from one SIPP to another, although appreciate I may have to sell first and then rebuy?

I do actually already have an AJ Bell SIPP account which I could use.

Any thoughts welcome!

Triumph13

If it makes you feel better and you don't mind paying two sets of fees. Are you really going to be living 'paycheck to paycheck' on your SIPP withdrawals though?

Personally, I'm happy with just the one ii SIPP, but I have my ISAs elsewhere.

spg1

'Are you really going to be living 'paycheck to paycheck' on your SIPP withdrawals though?'

Not quite, but not far off! With the concerns over AI it does worry me that a particular platform could potentially be paralysed for quite a while. I'm conscious that it would mean two sets of fees but maybe only say £200 more depending on platform.

kempiejon

I spread my SIPPs and ISAs between providers for just this type of fear of interruption to flow of funds. It is worth looking under the hood a bit, I reckon Halifax - my main ISA and Scottish Widows(as was iWeb) my minor SIPP are on the same back office IT. There used to be a tie in with Halifax and AJ Bell.

With my holdings I am not incurring quite double fees but I do pay a bit as not all providers have the same charging structure. Still the absolute amounts are not excessive. It does also increase admin compared one provider for all pension, investing, saving and banking needs.

I suppose a big box of money safely stashed at home is another cover, like having Amex, Mastercard and Visa for spending.

dunstonh

Not quite, but not far off! With the concerns over AI it does worry me that a particularly platform could potentially be paralysed for quite a while.

A platform is unlikely to be paralysed for quite a while due to a cyber attack. Front ends and back ends are typically separated, and they have a lot more redundancy and protections in place than a retailer.

The other issue is that many of the platforms use a backend provider. For example, around 7 out of 10 platfroms use FNZ. The platform themselves only codes and provide the front end. FNZ handles all the backend stuff (trades, custody etc). So, diversifying yourself across multiple FNZ backends is not really going to help if FNZ goes down.

You would need to ensure your provider diversification spans different software and custodians; otherwise, you have just wasted your time for nothing.

Exodi

I feel like this would be over the top to manage such a risk.

Rather than hold split your SIPP across two platforms, the simpler option might be keeping your cash buffer outside your SIPP.

As most retirees are holding years of income in cash, this would seem to mitigate even the most serious of cyber attacks.

Personally I think there is a big difference between the cyber security on an online retailer and an investment company with £85B AUM.

Let's also not forget that the cyber attack on M&S wasn't someone sat in a hoody in a dimly lit room typing in code into a command prompt style window and gaining access while M&S were powerless to stop it, as many might assume, it was caused by perpetrators calling up and pretending to be an employee to trick a third party IT support worker into resetting the password to gain access.

This (human error) is by far the most common type of compromise, technical compromises are very rare by comparison.

You would hope that a company, particularly a financial one, would have all sorts of systems in place to significantly mitigate the possibility of human error.

QrizB

90%+ of my DC pension funds are with Scottish Widows (my occupational pension scheme). I do however have ~£40k in a separate pension with Dodl, AJ Bell's app-based offering.

£40k would be enough to get me through a 12-month SW outage.

Dodl's fairly cheap for small holdings (0.15%/yr, min £1/month) but doesn't support withdrawals. I'm thinking that I'll transfer out of Dodl to "full fat" AJ Bell when I want to cash this in.

Triumph13

You should also be aware that if your planned 'growth SIPP' is crystallised, you would not be able to do partial transfers out of it, you could only transfer it all at once.

You could just draw enough tax free cash from your main SIPP to fill a couple of years of ISA allowance and leave that to grow as your backup.

StewedApple

https://forums.moneysavingexpert.com/discussion/comment/82131924#Comment_82131924

Ideally in a couple of different organisations to ensure the advantages of redundancy!

Albermarle

https://forums.moneysavingexpert.com/discussion/6682800/opening-back-up-sipp

My thinking is to put the growth part of my portfolio (which is in ETF trackers) into this new SIPP and leave the rest in ii which I'll drawdown from.

I'm guessing it's easy enough to transfer funds from one SIPP to another, although appreciate I may have to sell first and then rebuy? If they are standard ETFs, then should be no problem to transfer them directly.

I do actually already have an AJ Bell SIPP account which I could use. Aj Bell has a capped fee of £120 pa for SIPPs as long as the investments are shares- ETFs- ITs. So adding more funds in the shape of ETFs may not increase your costs too much.