Best SIPP platform for drawdown phase

[hiriskpaul]

I can sort of see how it might work. The administrator has to keep track of the proportion of the fund that is crystallised but not yet drawn (C). When crystallising an amount X, C increases by X. X must always be less than or equal to 100%-C. When drawing down an amount D, C drops to (C-D)/(1-D). D must always be less than or equal to C.

For example, initially with a 100k C=0%. Crystallise 20k, X=20% of the fund and C=20%.

Drawdown 10k, D=10% and C=(20%-10%)/(100%-10%) = 1/9 ~= 11.1111%.

Drawdown 5k, D=5k/90k ~= 5.5555% and C=(11.1111%-5.5555%)/(100%-5.5555%) ~= 5.8824%.

Drawdown 5k, D=5k/85k ~= 5.8824% and C=(5.8824%-5.8824%)/(100%-5.8824%) = 0%

Something along those lines should keep within the flexi-access drawdown rules whilst keeping everything in one pot.

Yes something like that. The important thing is that the percentage value has to be calculated on the day any deposits and withdrawals are made. It's not something that could be done retrospectively, as the value of the SIPP will be constantly changing.

You just have to hope that the administrators are keeping track of it.

Scott.

I see what you mean. That is complicated. There may be additional rules that add to complexity as well. One that never occurred to me until I crystallised was accrued interest. If you hold bonds ìn your SIPP and crystallise a proportion of it, HL calculate the accrued interest on any bonds going into the drawdown account and include this in the crystallisation amount. This amount is used to test against the LTA and to work out the permitted PCLS. I guess Youinvest must take accrued interest into consideration as well somehow.

[swill453]

If you go into "My Account"/"Access My Pension". Then under "If you'd like to create a new illustration, click continue", press the Continue button.

It will then chug away for a minute or more and will eventually come back with "Your pension information was obtained successfully. Please click above to continue.". Press the Continue button again.

Now click on "Tax free lump sum only". It then will show you your approximate Total Fund value (crystallised plus uncrystallised) and then a figure for Crystallised and a second figure for Uncrystallised. That should give you what you want.

You can then abandon this by clicking on one of the links at the top to navigate back to your account.

It's a bit long winded but I think it gives you the figures you wanted.

Wow fantastic! Just what I was looking for, thanks. Would have been nice of them to make it a bit easier (all I want is a single percentage value) but, hey...

Scott.

[swill453]

Why not setup a separate SIPP for new contributions? Vanguard with a 0.15% fee pa seems reasonable, so £5 per year for each year you contribute.

Being able to manage everything as one pot is useful to us.

For example, the £2880 + £720 added each year can be more-or-less immediately withdrawn as drawdown, since it becomes part of the same pot, being neither crystallised nor uncrystallised until taken out. Means it doesn't have to be invested.

Scott.

[Myfyr]

Why not setup a separate SIPP for new contributions? Vanguard with a 0.15% fee pa seems reasonable, so £5 per year for each year you contribute.

Being able to manage everything as one pot is useful to us.

For example, the £2880 + £720 added each year can be more-or-less immediately withdrawn as drawdown, since it becomes part of the same pot, being neither crystallised nor uncrystallised until taken out. Means it doesn't have to be invested.

Scott.

I am in the other camp. I think the flexibility of allowing crystallised funds and uncrystallised funds separated allows them to be invested differently. You may want this as the crystallised funds may be used at different times and could be invested more aggressively for exmple. This can be done in one account but it doesnt work quite as well. For example you could get a bigger PCLS in the future from a more aggressive approach than if it were in a combined account. It could go the other way, of course!

[Chrysalis]

Thanks for the continued discussion regarding separation (or not) of crystallised funds.

So, AJBell doesn’t separate. HL does (and charges for the privilege).

What about II? Anyone using them in drawdown?

[ReallyVeryFoolish]

Thanks for the continued discussion regarding separation (or not) of crystallised funds.

So, AJBell doesn’t separate. HL does (and charges for the privilege).

What about II? Anyone using them in drawdown?

There are no separate pots at II. There is a link that you follow in your SIPP and that gives you the numbers of crystallised v non-crystallised assets.

RVF

[Chrysalis]

Thanks for the continued discussion regarding separation (or not) of crystallised funds.

So, AJBell doesn’t separate. HL does (and charges for the privilege).

What about II? Anyone using them in drawdown?

There are no separate pots at II. There is a link that you follow in your SIPP and that gives you the numbers of crystallised v non-crystallised assets.

RVF

Thanks. Can you have different funds held in each portion or is it a straight pro rata split?

[ReallyVeryFoolish]

Thanks for the continued discussion regarding separation (or not) of crystallised funds.

So, AJBell doesn’t separate. HL does (and charges for the privilege).

What about II? Anyone using them in drawdown?

There are no separate pots at II. There is a link that you follow in your SIPP and that gives you the numbers of crystallised v non-crystallised assets.

RVF

Thanks. Can you have different funds held in each portion or is it a straight pro rata split?

Not that I can see. I am not an expert obviously, but I am only aware of HL who segregate crystallised and non-crystallised assets into separate pots.

RVF

[swill453]

Thanks for the continued discussion regarding separation (or not) of crystallised funds.

So, AJBell doesn’t separate. HL does (and charges for the privilege).

What about II? Anyone using them in drawdown?

There are no separate pots at II. There is a link that you follow in your SIPP and that gives you the numbers of crystallised v non-crystallised assets.

Thanks. Can you have different funds held in each portion or is it a straight pro rata split?

If it's like AJBell then the answer to that is "neither". There's no "split" or "portions" at all. The (single) pot comprises all your assets, both crystallised and uncrystallised.

You can see this in action with what my wife does every year. Put in £2880 cash, which is increased to £3600 with tax relief. This money is, by definition, uncrystallised.

However some of my wife's SIPP is crystallised. She can immediately drawdown the same £3600 cash (without generating another benefit crystallisation event) and it is deemed to come from the crystallised tranche.

Scott.

[Joe45]

The percentage values of crystallised but undrawn C and uncrystallised 100%-C does not fluctuate with fund value, but the amount that C is adjusted at each crystallisation and drawdown event will depend on the size of the event (amount crystallised or drawn) and the fund value at the time of the event. If you wanted to, I would have thought you could keep track of C yourself. Does Youinvest not provide you with the fund value when you crystallise and make withdrawals?

It's quite difficult for the SIPPholder to keep track of this.

Take my wife's SIPP for example. She crystallised all of it a few years ago and started taking drawdown. So at that point it's 100% crytallised, easy to keep track of.

She then annually pays in a £2880 contribution. So now the SIPP is partially uncrystallised. The proportion depends on the value of the SIPP at the time the contribution is made. She could keep note of that, but we have no idea if AJBell use the value at the beginning of the day, the end of the day, or maybe the exact time the transaction occurs. So any percentage value we take note of is only an approximation.

At some later point, the tax relief of £720 from HMRC arrives in the SIPP. In the meantime some drawdown has been taken, and also the value of the investments has changed. Again, the proportion now uncrystallised goes up, and depends on the current value of the SIPP. So unless we log on every day to see if the tax relief has arrived, we don't really know what the value was at the time the money was added.

So the information needed is a simple percentage, but keeping track of it isn't easy. One has to hope that the AJBell system is doing so. As I said, it would be nice if you could see this value online.

Scott.

Hi Scott,

Why not setup a separate SIPP for new contributions? Vanguard with a 0.15% fee pa seems reasonable, so £5 per year for each year you contribute.

What a marvellous idea. I’m about to enter drawdown and although my earnings will cease, I gather I can nonetheless continue to make a small contribution to a SIPP and have HMRC give me a bit. Running this in a new SIPP account seems a clean approach.

[paulnumbers]

What a marvellous idea. I’m about to enter drawdown and although my earnings will cease, I gather I can nonetheless continue to make a small contribution to a SIPP and have HMRC give me a bit. Running this in a new SIPP account seems a clean approach.

I think it's £2,880 a year you can put in, so long as you don't break the recycling rules. I thought the following guide was useful.

https://www.hl.co.uk/__data/assets/pdf_ ... tsheet.pdf

[swill453]

What a marvellous idea. I’m about to enter drawdown and although my earnings will cease, I gather I can nonetheless continue to make a small contribution to a SIPP and have HMRC give me a bit. Running this in a new SIPP account seems a clean approach.

I think it's £2,880 a year you can put in, so long as you don't break the recycling rules. I thought the following guide was useful.

https://www.hl.co.uk/__data/assets/pdf_ ... tsheet.pdf

It's extremely unlikely you'd break the recycling rules just by paying in £2880 per year. And I'm pretty sure "they" wouldn't be interested in such small beer anyway.

Scott.

[terminal7]

I gather I can nonetheless continue to make a small contribution

You will not get the tax relief if you are over 75.

T7

[b0f77]

This has been an interesting thread as I am in a similar position looking for a low fuss and not too expensive drawdown solution.

It looks like Vanguard are now offering drawdown in their SIPP just announced today. From a quick scan of their site pages on this it looks like they will offer phased drawdown and UFPLS drawdown and there are no additional drawdown charges on top of their platform fee. On their site it says “there are no additional charges for our drawdown service”.

https://www.vanguardinvestor.co.uk/arti ... h-vanguard

[Chrysalis]

There are no separate pots at II. There is a link that you follow in your SIPP and that gives you the numbers of crystallised v non-crystallised assets.

Thanks. Can you have different funds held in each portion or is it a straight pro rata split?

If it's like AJBell then the answer to that is "neither". There's no "split" or "portions" at all. The (single) pot comprises all your assets, both crystallised and uncrystallised.

You can see this in action with what my wife does every year. Put in £2880 cash, which is increased to £3600 with tax relief. This money is, by definition, uncrystallised.

However some of my wife's SIPP is crystallised. She can immediately drawdown the same £3600 cash (without generating another benefit crystallisation event) and it is deemed to come from the crystallised tranche.

Scott.

Curiouser and curiouser!
When I said a ‘pro rata split’ I was assuming that if there was no visible separation then, by default, there would be the same asset allocation across crystallised and uncrystallised portions.
But the example you give, implies that this isn’t the case. When your wife draws down the cash does she have to specify whether it comes from crystallised or uncrystallised funds? And in the latter case if it’s UFPLS or tax free cash?
And, if assets can switch pots (ie the uncrystallised cash becomes part of the crystallised pot) how on earth do they calculate the growth in the drawdown funds, for the purposes of the second LTA test? I assume at age 75 they MUST have to apportion the funds pro rata (ie assume same asset allocation across both crystallised and uncrystallised? I don’t know how they would do that, how do they calculate what proportion of the funds remaining are uncrystallised?). I mean, I’m sure it must be possible or they wouldn’t be able to do it, but it certainly doesn’t seem easy to understand or intuitive. And I assume you couldn’t choose to have a different asset allocation for uncrystallised funds compared with the taxable drawdown part?

[swill453]

Curiouser and curiouser!
When I said a ‘pro rata split’ I was assuming that if there was no visible separation then, by default, there would be the same asset allocation across crystallised and uncrystallised portions.
But the example you give, implies that this isn’t the case. When your wife draws down the cash does she have to specify whether it comes from crystallised or uncrystallised funds? And in the latter case if it’s UFPLS or tax free cash?

No there literally is no split in the assets. At any moment in time, the only relevant information is what percentage of the total is crystallised and what percentage is uncrystallised. Adding new money, or taking drawdown, affects the relative percentages.

And, if assets can switch pots (ie the uncrystallised cash becomes part of the crystallised pot) how on earth do they calculate the growth in the drawdown funds, for the purposes of the second LTA test? I assume at age 75 they MUST have to apportion the funds pro rata (ie assume same asset allocation across both crystallised and uncrystallised? I don’t know how they would do that, how do they calculate what proportion of the funds remaining are uncrystallised?). I mean, I’m sure it must be possible or they wouldn’t be able to do it, but it certainly doesn’t seem easy to understand or intuitive. And I assume you couldn’t choose to have a different asset allocation for uncrystallised funds compared with the taxable drawdown part?

I confess I have no idea how this method applies with respect to the LTA as it won't be relevant to me.

Scott.

[Chrysalis]

Curiouser and curiouser!
When I said a ‘pro rata split’ I was assuming that if there was no visible separation then, by default, there would be the same asset allocation across crystallised and uncrystallised portions.
But the example you give, implies that this isn’t the case. When your wife draws down the cash does she have to specify whether it comes from crystallised or uncrystallised funds? And in the latter case if it’s UFPLS or tax free cash?

No there literally is no split in the assets. At any moment in time, the only relevant information is what percentage of the total is crystallised and what percentage is uncrystallised. Adding new money, or taking drawdown, affects the relative percentages.

And, if assets can switch pots (ie the uncrystallised cash becomes part of the crystallised pot) how on earth do they calculate the growth in the drawdown funds, for the purposes of the second LTA test? I assume at age 75 they MUST have to apportion the funds pro rata (ie assume same asset allocation across both crystallised and uncrystallised? I don’t know how they would do that, how do they calculate what proportion of the funds remaining are uncrystallised?). I mean, I’m sure it must be possible or they wouldn’t be able to do it, but it certainly doesn’t seem easy to understand or intuitive. And I assume you couldn’t choose to have a different asset allocation for uncrystallised funds compared with the taxable drawdown part?

I confess I have no idea how this method applies with respect to the LTA as it won't be relevant to me.

Scott.

Fair enough, but can you clarify my other question? When your wife withdraws the cash, does she have to indicate whether it is from the drawdown (taxable) pot or or from uncrystallised funds? I’m assuming yes.

[swill453]

Fair enough, but can you clarify my other question? When your wife withdraws the cash, does she have to indicate whether it is from the drawdown (taxable) pot or or from uncrystallised funds? I’m assuming yes.

Sorry I missed that bit. Yes, if she wants to take any from the drawdown portion it's a very simple online form to enter the amount and click ok.

To crystallize any further funds it's more complex, involving getting an illustration, confirming whether financial advice has been taken etc.

Scott.

[swill453]

If you go into "My Account"/"Access My Pension". Then under "If you'd like to create a new illustration, click continue", press the Continue button.

It will then chug away for a minute or more and will eventually come back with "Your pension information was obtained successfully. Please click above to continue.". Press the Continue button again.

Now click on "Tax free lump sum only". It then will show you your approximate Total Fund value (crystallised plus uncrystallised) and then a figure for Crystallised and a second figure for Uncrystallised. That should give you what you want.

You can then abandon this by clicking on one of the links at the top to navigate back to your account.

It's a bit long winded but I think it gives you the figures you wanted.

Wow fantastic! Just what I was looking for, thanks. Would have been nice of them to make it a bit easier (all I want is a single percentage value) but, hey...

I think you (fisher) know their web site better than they do themselves! I had asked AJBell in a secure message how to view this information online, and eventually got an answer today:

"Please find the current fund split of your SIPP as requested.

Crystallised: £X

Uncrystallised: £Y

Please note that the values given above are not guaranteed; should the member proceed with taking benefits, all investments within the SIPP will be valued at the BCE date nominated on the Benefit Form. This in turn will be reflected in the value of the crystallised benefits, uncrystallised benefits, and therefore the PCLS. When valuing the SIPP for benefit purposes, certain assets must be valued using specific methodology (e.g. shares) meaning the values used at the BCE may be different to any recent valuations we have.

You are not able to request this via the website. Please email this address (A@B) with any future requests and we will provide you an up to date split of your funds." (my bold)

And of course the values exactly match what I'd already found using the "new illustration" method.

Again, thanks.

Scott.

[fisher]

No problem. It was only when I was doing a second crystallization earlier this year when I stumbled across it.

I am guessing that when you go through the process it fetches information from a back office system that gives the current values and hence the long delay while it retrieves them. I don't think they would want to encourage people to regularly use this facility!