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  • FIRST POST
    • anselld
    • By anselld 14th Jun 19, 7:54 AM
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    anselld
    How do these SIPPs work in drawdown?
    • #1
    • 14th Jun 19, 7:54 AM
    How do these SIPPs work in drawdown? 14th Jun 19 at 7:54 AM
    I am looking to move my SIPP to a cheaper platform (from Aegon) and shortly to enter flexi access drawdown.

    Looking at the cost comparisons the cheapest are Share Centre, iWeb/Halfax or II.

    However on investigating each of these it seems they all combine crystallised and uncrystallised funds in a single online account. You need to phone them up to find out whats what at any time.

    Seems to me one of the big advantages of FAD is that you can continue to manage the investments in crystallised fund (75%) until needed. How can you do that effectively if they are all mixed up with uncrystallised? What if you hold the same fund in both the crystallised and uncrystallised parts; how do they no what to do if you sell/switch online?

    It seems a very poor if not unworkable setup. Aegon at least have two separate accounts but their fees are 3x the cheap platforms.
Page 1
    • AnotherJoe
    • By AnotherJoe 14th Jun 19, 8:32 AM
    • 15,944 Posts
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    AnotherJoe
    • #2
    • 14th Jun 19, 8:32 AM
    • #2
    • 14th Jun 19, 8:32 AM
    Dont know how it works with those, that sounds very clumsy and awkward.
    With the much maligned HL you end up with two SIPP accounts, once with the crystallized investments one without and so you can easily see whats in either.

    The fees are dependent upon your investments, I'm with HL , mine are mostly ITs, shares and ETFs and so the fees are capped at quite a low level.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • anselld
    • By anselld 14th Jun 19, 8:36 AM
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    anselld
    • #3
    • 14th Jun 19, 8:36 AM
    • #3
    • 14th Jun 19, 8:36 AM
    Dont know how it works with those, that sounds very clumsy and awkward.
    With the much maligned HL you end up with two SIPP accounts, once with the crystallized investments one without and so you can easily see whats in either.

    The fees are dependent upon your investments, I'm with HL , mine are mostly ITs, shares and ETFs and so the fees are capped at quite a low level.
    Originally posted by AnotherJoe
    That seems the sensible approach but unfortunately HL is more expensive even than Aegon at my pot size (circa 950k).
    • Albermarle
    • By Albermarle 14th Jun 19, 8:44 AM
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    Albermarle
    • #4
    • 14th Jun 19, 8:44 AM
    • #4
    • 14th Jun 19, 8:44 AM
    With the much maligned HL
    I would say more the 'much praised' HL from most of the comments I see !
    The one that gets maligned is Fidelity , somewhat unfairly in my view.
    • ColdIron
    • By ColdIron 14th Jun 19, 10:22 AM
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    ColdIron
    • #5
    • 14th Jun 19, 10:22 AM
    • #5
    • 14th Jun 19, 10:22 AM
    That seems the sensible approach but unfortunately HL is more expensive even than Aegon at my pot size (circa 950k).
    Originally posted by anselld
    It very much depends upon the type of investments you hold with them. They charge 0.45% but apply a cap at 200 for company shares, investment trusts and ETFs. Unit trusts/OEICS (funds) are not capped. They don't have an additional SIPP fee or charge to crystallise or move into drawdown, many others do. It can be quite efficient

    I have often wondered how this works with a single account and it sounds a mess, I presume some of them do not allow phased drawdown
    • dunstonh
    • By dunstonh 14th Jun 19, 11:05 AM
    • 98,597 Posts
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    dunstonh
    • #6
    • 14th Jun 19, 11:05 AM
    • #6
    • 14th Jun 19, 11:05 AM
    That seems the sensible approach but unfortunately HL is more expensive even than Aegon at my pot size (circa 950k).
    Originally posted by anselld
    Aegon is a cheap platform. They also throw around special terms very easily. For example, on your value, 0.13% would be the ballpark.

    However, their software is abysmal. They hoped to be off it by now but the software they are moving to has turned out to be really poor and they are suffering major issues. So, they have left the old platform running side by side for now.

    This is probably why they are so easy at issuing special terms. They need to buy the business as the software is not good.

    Seems to me one of the big advantages of FAD is that you can continue to manage the investments in crystallised fund (75%) until needed. How can you do that effectively if they are all mixed up with uncrystallised? What if you hold the same fund in both the crystallised and uncrystallised parts; how do they no what to do if you sell/switc
    It varies with providers but the dominant method is to have two segments.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • anselld
    • By anselld 14th Jun 19, 11:40 AM
    • 6,428 Posts
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    anselld
    • #7
    • 14th Jun 19, 11:40 AM
    • #7
    • 14th Jun 19, 11:40 AM
    Aegon is a cheap platform. They also throw around special terms very easily. For example, on your value, 0.13% would be the ballpark.

    However, their software is abysmal. They hoped to be off it by now but the software they are moving to has turned out to be really poor and they are suffering major issues. So, they have left the old platform running side by side for now.

    This is probably why they are so easy at issuing special terms. They need to buy the business as the software is not good.



    It varies with providers but the dominant method is to have two segments.
    Originally posted by dunstonh
    Yes, I did have special terms but they removed them when I went non-advised. It is still about 0.12% though, but I could get down to 0.04% with the lowest cost platforms. I obviously don't want to do that and lose basic functionality though!
    • Albermarle
    • By Albermarle 14th Jun 19, 6:16 PM
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    Albermarle
    • #8
    • 14th Jun 19, 6:16 PM
    • #8
    • 14th Jun 19, 6:16 PM
    I think that 0.12 % is already very much at the low end , so I would be concentrating on the customer service , website functionality etc rather than focusing on reducing it even further .
    Maybe you could research other providers but not necessarily with just a view to get a lower charge.
    • anselld
    • By anselld 14th Jun 19, 6:36 PM
    • 6,428 Posts
    • 6,369 Thanks
    anselld
    • #9
    • 14th Jun 19, 6:36 PM
    • #9
    • 14th Jun 19, 6:36 PM
    I think that 0.12 % is already very much at the low end , so I would be concentrating on the customer service , website functionality etc rather than focusing on reducing it even further .
    Maybe you could research other providers but not necessarily with just a view to get a lower charge.
    Originally posted by Albermarle
    Agreed. I will only move if I can get the same or better functionality at lower cost. Doesn't seem to be available at the moment so will probably stay put.

    Still seems 100 a month for old rope though.
    Last edited by anselld; 14-06-2019 at 6:39 PM.
    • EdSwippet
    • By EdSwippet 14th Jun 19, 9:19 PM
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    EdSwippet
    However on investigating each of these it seems they all combine crystallised and uncrystallised funds in a single online account. You need to phone them up to find out whats what at any time.
    Originally posted by anselld
    The way Interactive Investor described it to me when I asked -- and I think I got the gist -- is that they maintain a record of the proportion of your pension that is crystallised. The proportion only changes with contributions, withdrawals, and crystallisation events. Otherwise the SIPP operates as before. There is no attempt to segregate the crystallised and uncrystallised elements.

    For example, you have 8,000 in a pension and you crystallise 4,000. You take the 1,000 PCLS and now have 7,000 in the pension. 3/7 of it, 3,000 is crystallised, so 42.86%. Irrespective of any fund switches inside the SIPP, if overall investment gains take the SIPP total balance to 10k, you still have 42.86% crystallised, so 4,286, and now 5,714 uncrystallised.

    Aside from being somewhat obscure, the main problem with this is that it does not support holding different assets in the crystallised and uncrystallised elements. I had planned for them to have distinct risk profiles, but that's impossible to achieve under this scheme because all the investments remain lumped together as one. Not "unworkable" then, but not exactly user-friendly either.
    • shinytop
    • By shinytop 15th Jun 19, 7:45 AM
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    shinytop
    Aside from being somewhat obscure, the main problem with this is that it does not support holding different assets in the crystallised and uncrystallised elements. I had planned for them to have distinct risk profiles, but that's impossible to achieve under this scheme because all the investments remain lumped together as one. Not "unworkable" then, but not exactly user-friendly either.
    Hmm I'll have to think about this. I can't think why I'd personally want different risk profiles but I would like to know easily how much is crystallised and how much isn't. I get the impression that despite having been around for a long lime, the drawdown industry is still somewhat in its infancy. It also might be the case that it's the software being used that is dictating the mechanics of how it works.
    • anselld
    • By anselld 15th Jun 19, 8:31 AM
    • 6,428 Posts
    • 6,369 Thanks
    anselld
    The way Interactive Investor described it to me when I asked -- and I think I got the gist -- is that they maintain a record of the proportion of your pension that is crystallised. The proportion only changes with contributions, withdrawals, and crystallisation events. Otherwise the SIPP operates as before. There is no attempt to segregate the crystallised and uncrystallised elements.
    Originally posted by EdSwippet
    That is fine up to a point, however the purpose of entering drawdown is usually to take income so it is going to be very difficult to keep track of the split in practice.

    My problem is approaching the LTA, I want to be able to have visibility of the growth element of crystallised funds so that I can make sure I withdraw that prior to 75. I fear it is going to be unworkable (for me) with a mixed pot and worse I have doubts in the provider's ability to keep tabs correctly.
    • EdSwippet
    • By EdSwippet 15th Jun 19, 8:56 AM
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    EdSwippet
    Hmm I'll have to think about this. I can't think why I'd personally want different risk profiles but I would like to know easily how much is crystallised and how much isn't.
    Originally posted by shinytop
    For me, it's about getting different long-term growth rates. I have 5% LTA headroom left to me, and I have crystallised 2/3 of my pension so far. I want bonds in the crystallised part, so that it grows only moderately and lessens problems with the LTA test at age 75 -- I balance this with stocks in ISAs and trading account. I would be happy with faster-growth assets in the uncrystallised part to optimise the PCLS I can draw from that when I crystallise the final 1/3.

    I realise that I'm probably an edge case in all of this. Most people will probably crystallise their entire pension in one go, and so never encounter any of the quirks of non-segregated SIPPs. That doesn't stop it being slightly annoying for me, though.

    I get the impression that despite having been around for a long lime, the drawdown industry is still somewhat in its infancy. It also might be the case that it's the software being used that is dictating the mechanics of how it works.
    Originally posted by shinytop
    It definitely looks like a 'feature' -- if one can even call it this -- that exists for the convenience of the platform rather than the convenience of the customer.

    I think I can work with it, but I will need to carefully finesse crystallising the remainder of my pension, probably periodically in ever smaller chunks as it converges on the LTA. Breaching the LTA when I don't have to would be an unforced error. The problem here is the process of crystallisation itself. All manual, all paper and snail-mail based. A minimum two weeks or so of lead time, during which markets can move a lot, in either direction.
    • EdSwippet
    • By EdSwippet 15th Jun 19, 9:13 AM
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    EdSwippet
    That is fine up to a point, however the purpose of entering drawdown is usually to take income so it is going to be very difficult to keep track of the split in practice.
    Originally posted by anselld
    Interactive Investor should keep track of it. The main problem would perhaps be obtaining it. My recollection of speaking to them was that they could tell you if you ask and that they planned to make it visible somehow within online accounts. The latter would obviously be much better for everyone, failing a switch to proper segregation, but I don't know if or when this would be (or where, or how), as I haven't yet completed my Interactive Investor SIPP crystallisation. Maybe in a week or so ...

    In my case I won't be either taking income or making any contributions, so once I know this number it should stay constant. I'll work it into my spreadsheets, and hopefully everything will track for me.

    So perhaps workable, but it's not a particularly customer-friendly way for Interactive Investor (and others) to do things, though. I have an Aviva (MyMoney) ex-employer pension in drawdown, and that operates much more transparently. Aviva were also slicker when it came to the crystallisation process itself.
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