How is Flexi Access Drawdown Calculated?

[StayinAlive]

I have a part of my SIPP with AJBell (Sippdeal) in a flexi access drawdown tranche. I thought that when you crystallised an amount, say £100000, you could take £25K tax free and the remaining £75K would be fixed in stone. But they tell me that this figure (£75K) is varied depending on daily fluctuations in the value of my overall fund. Is this correct? If so, it means that, at any one time, you don't know how much you can take in drawdown (without having to telephone them and get a valuation). In the "manage my pension" page where you apply to take a drawdown, it just gives you the current cash balance for the entire SIPP which is not the same thing. Do other SIPP's work like this?

[swill453]

When you crystallise part of the SIPP, AJBell will remember the proportion that is crystallised, not a fixed amount. It's difficult to see how it could be done differently. In an extreme case the value of your fund could drop below the value of 75% when you crystallised, who could make up the shortfall?

Scott.

[KrispyDuck]

Maybe a bit late responding to this but I can offer my limited experience of the different ways that the crystalised/uncrystalised pension split is handled.

Option 1 (AJ Bell amongst others) is to maintain a single SIPP account in which the provider maintains a "behind-the-scenes" calculation of the proportion that has been crystalised. So if the total value of the account changes by X% (up or down) then both the crystalised and uncrystalised portion change by X%. If you are still making contributions (to the uncrystalised part) and/or taking income (from the crystalised part) it becomes very difficult to keep track of how much is in each pot at any time. This typically requires calling customer service to get the figure and my experience is that it is sometimes calculated incorrectly(!).

Option 2 (Hargreaves Lansdown - at least when i last used them a coupel of years ago) is to maintain separate accounts for the crystalised and uncrystalised portions. This has benefit of transparency of the values in each but means you need to choose which investments to hold in each account separately. Each account changes values independently of the other. It may lead to additional charges. This is in fact about the only feature i miss since moving my SIPP from HL.

Which approach is best is a matter of personal preference.