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SIPP Natural Yield (Dividends)

Including Financial Independence and Retiring Early (FIRE)
Darka
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SIPP Natural Yield (Dividends)

#236738

Postby Darka » July 15th, 2019, 11:24 am

Does anyone know of a SIPP that allows you to auto-payaway dividends during drawdown, so that you can keep the SIPP invested and only extract the income?

Obviously it would also be better if the SIPP allows you to pay charges from outside of the account, so that you don't have to keep any cash in it.

regards,
Darka

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Re: SIPP Natural Yield (Dividends)

#236764

Postby ffacoffipawb64 » July 15th, 2019, 1:11 pm

Darka wrote:Does anyone know of a SIPP that allows you to auto-payaway dividends during drawdown, so that you can keep the SIPP invested and only extract the income?

Obviously it would also be better if the SIPP allows you to pay charges from outside of the account, so that you don't have to keep any cash in it.

regards,
Darka


Better to pay charges from within due to effective tax relief on them?

Darka
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Re: SIPP Natural Yield (Dividends)

#236766

Postby Darka » July 15th, 2019, 1:15 pm

ffacoffipawb64 wrote:Better to pay charges from within due to effective tax relief on them?


Probably yes, but it would depend if I can find a SIPP which would payaway only the dividends, if they could only do the cash balance as payaway then it wouldn't leave any cash for the charges, unless you could set a minimum cash balance if you see what I mean.

Dod101
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Re: SIPP Natural Yield (Dividends)

#236774

Postby Dod101 » July 15th, 2019, 1:31 pm

Alliance Trust Savings will but only so long as their independent website remains. As you will know the plan is to migrate their accounts to the II platform and they do not have automatic payments.

Dod

kempiejon
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Re: SIPP Natural Yield (Dividends)

#236814

Postby kempiejon » July 15th, 2019, 3:37 pm

Darka wrote:Does anyone know of a SIPP that allows you to auto-payaway dividends during drawdown, so that you can keep the SIPP invested and only extract the income?

Obviously it would also be better if the SIPP allows you to pay charges from outside of the account, so that you don't have to keep any cash in it.

regards,
Darka


My HL SIPP account does not offer this, my Halifax Share Dealing and ShareBuilder offers this as does the ISA but a quick check on their website and I don't think they offer it on the SIPP.

Darka
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Re: SIPP Natural Yield (Dividends)

#236817

Postby Darka » July 15th, 2019, 3:49 pm

kempiejon wrote:My HL SIPP account does not offer this, my Halifax Share Dealing and ShareBuilder offers this as does the ISA but a quick check on their website and I don't think they offer it on the SIPP.


Thank you, I suspect no provider does but wanted to ask to see if anyone knew of any that did.

It's a shame really, I'm just trying to automate the extraction of money from the SIPP so that I don't have to remember to do it later when too old to remember (could also do an annuity then I guess….)

swill453
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Re: SIPP Natural Yield (Dividends)

#236819

Postby swill453 » July 15th, 2019, 4:03 pm

Darka wrote:It's a shame really, I'm just trying to automate the extraction of money from the SIPP so that I don't have to remember to do it later when too old to remember (could also do an annuity then I guess….)

You could just build up a bit of a cash buffer in it, then set up a regular monthly drawdown that equates to the smoothed dividend flow.

Assuming dividends increase over time, you could raise the monthly drawdown every now and again when you can be bothered.

I suspect the providers don't do exactly what you're looking for as there's a fair bit of work involved in doing irregular ad hoc drawdown. They effectively have to run a payroll every time. Even more work if it's done as UFPLS drawdown.

Scott.

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Re: SIPP Natural Yield (Dividends)

#236820

Postby Dod101 » July 15th, 2019, 4:13 pm

With my SIPP with ATS, I just let dividends accumulate and then in March each year either take the accumulated dividends or more or less depending on my tax situation. It makes a useful buffer.

Dod

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Re: SIPP Natural Yield (Dividends)

#236863

Postby TUK020 » July 15th, 2019, 6:07 pm

Suspect that the complexities of the tax submission (i.e. running a payroll) make this more complicated/expensive for providers.
If you set up a cash buffer within the SIPP, then you should be able to automate a fixed monthly payout.
Once a year, at the start of the tax year, review the dividend income, cash buffer level, and adjust up or not the monthly payout.
Means that you won't get a choice level of interest on the cash buffer, but keeps it simple. Also fixes the fees.

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Re: SIPP Natural Yield (Dividends)

#236864

Postby Alaric » July 15th, 2019, 6:09 pm

Dod101 wrote:I just let dividends accumulate and then in March each year either take the accumulated dividends or more or less depending on my tax situation.


A variation on that theme would be to divide whatever was there on 5th April by 12 and ask for it to be paid monthly over the following year. I think some SIPP providers still pay interest on cash balances, not that rates of 0.10% make a lot of difference.

swill453
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Re: SIPP Natural Yield (Dividends)

#236872

Postby swill453 » July 15th, 2019, 6:42 pm

TUK020 wrote:Suspect that the complexities of the tax submission (i.e. running a payroll) make this more complicated/expensive for providers.
If you set up a cash buffer within the SIPP, then you should be able to automate a fixed monthly payout.
Once a year, at the start of the tax year, review the dividend income, cash buffer level, and adjust up or not the monthly payout.
Means that you won't get a choice level of interest on the cash buffer, but keeps it simple. Also fixes the fees.

Didn't I just say that? :-)

Scott.

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Re: SIPP Natural Yield (Dividends)

#237165

Postby runnygum » July 17th, 2019, 4:05 am

HL lets you pay fees from outside the SIPP I believe its a check box option in the settings pages somewhere.

As for withdrawal as suggested just take once or twice a year just before year-end so you can manage tax ideally. Run the cash balance down over the year outside the SIPP and refresh :) That was you can clean out all the dividends etc.

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Re: SIPP Natural Yield (Dividends)

#237334

Postby hiriskpaul » July 17th, 2019, 7:59 pm

HL will allow you to do this, sort of. If you set up a regular monthly payment amount and there is insufficient cash in the account to meet the payment a reduced payment is made of your cash balance less £50. I think it might be possible to stipulate an amount other than £50 though. So just set up a regular monthly payment, larger than your expected maximum monthly income and that should achieve your desired result.

Depending on whatever is in your account though, this might be a little dangerous if you don't keep an eye on it. For example if you hold shares in a company that is taken over for cash, you may find all or part of the capital being paid out, which may not be what you want. If you only hold collective investments, this problem is unlikely to arise.

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Re: SIPP Natural Yield (Dividends)

#238139

Postby mickeypops » July 21st, 2019, 8:13 am

swill453 wrote:
Darka wrote:It's a shame really, I'm just trying to automate the extraction of money from the SIPP so that I don't have to remember to do it later when too old to remember (could also do an annuity then I guess….)

You could just build up a bit of a cash buffer in it, then set up a regular monthly drawdown that equates to the smoothed dividend flow.

Assuming dividends increase over time, you could raise the monthly drawdown every now and again when you can be bothered.

I suspect the providers don't do exactly what you're looking for as there's a fair bit of work involved in doing irregular ad hoc drawdown. They effectively have to run a payroll every time. Even more work if it's done as UFPLS drawdown.

Scott.


That’s exactly what I do on my and Mrs MP’s SIPPs. Works a treat.

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Re: SIPP Natural Yield (Dividends)

#238154

Postby xxd09 » July 21st, 2019, 9:21 am

Keep a cash buffer of 2 years expenses in high interest Building Society Account
Run your investment funds in accumulation form inside the SIPP
Withdraw a lump sum of cash once a year as and when you need to-
having realised the requisite number of shares -to top up your cash buffer
Only one R55 form per year needed to reclaim Tax if required
Simple,easy to keep track,cheap!
xxd09


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