Drawing benefits from Freetrade SIPP

Hi,
I was one of the ones that really waited for FreeTrade to launch their SIPP option. Once it went live earlier this year, I done all my dd , compared fees, make calculations, etc and indeed - Freetrade’s SIPP is by far the best available option for SIPPs in UK. Just before joining I took the time and read carefully through all the T&C and what stopped me from joining was the fact that: “YOU CANNOT DRAW BENEFITS FROM THE FREETRADE SIPP AND WILL HAVE TO TRANSFER TO ANOTHER PENSION PLAN TO DO THIS”.
As mentioned before, I found that quite discouraging even if I know little facts about how this would happen. In my mind, transferring to another plan close to retirement age just to draw the benefits might be costly or impossible as I don’t see why other company would happily accept your pension funds just for you to draw the benefits, after you haven’t paid f/ all in charges to them over the years. Again, this is just my own thinking and I have not explored what the situation is in reality. This is the reason why I am here now)

  1. Does anyone have knowledge of how this would work out? What type of charges would one incur when wanting to transfer to another plan close to retirement age just to be able to draw the benefits?
  2. For the ones that have already joined or transferred their pensions to Freetrade SIPP - what is your plan for when the moment comes to draw the benefits and you will not be able to do it directly from Freetrade?
  3. Does anyone know for sure if other pension providers will accept the transfer from Freetrade just to draw the benefits?
    Any comments, thoughts or suggestions on this topic would be really appreciated ( even from Freetrade moderators if there are any ).
    Cheers,
    Alex
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Does this not relate to the purchasing of an annuity and you can still sell holding / use dividends to create an income stream?

When’s retirement for you? In theory, zero. Why would it cost to transfer your pension?
To give an example. Vanguard launched their SIPP not that long ago and recently just introduced drawdown options. Cost to transfer? Zero.

Freetrade will presumable look to offer drawdown options at some point in the future. In the event that they don’t in 30-40 years time ill likely have already left them for someone whos competent.

Whats one got to do with the other? Why would a pension provider care what age you are? Its more money for them, especially older pension pots with a lot more money in them where many pension providers are percentage fee based.

You don’t suddenly stop paying fees because you’re drawing down your pension.

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Welcome to the forum @AlexM26

As mentioned, Vanguard didn’t have any sort of drawdown facility when they initially opened their SIPP offering (but now they do) so I suspect that Freetrade will be similar and offer drawdown facility in the near future.

In the event that there is no drawdown offered when I want to draw on my SIPP, I would just transfer to one of my other SIPPs - I can’t see any reason why other pension providers wouldn’t accept a transfer from Freetrade.

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Thanks for your reply Eden. You make a few fair points and I appreciate the information.

This is debatable. Considering that u managed to navigate a sipp throughout a long period of time and are able to make good investments, when the times comes and u can take out the money from the pension fund, you might be better off taking out 20k a year and put it in your ISA account, so that future returns don’t get taxed. This way you would pay the tax on the 20k - tax free yearly allowance, but future returns if realised in the ISA will be tax free.
Nevertheless, your conviction that u are able to transfer the pension fund to another plan that offers drawdowns makes me a bit more confident to choose Freetrade for my SIPP.
All the best

Thanks for your reply Weenie, happy to hear that u too think moving to another plan would be frictionless.

I believe that at the moment there is no drawdown option at all offered by Freetrade.

The only consideration about transfers is if they can do in-species transfers or not. At the moment they don’t. That may change its hard to tell what the rules may be.

However pension provers want the fees from managing your pension so transfers will always be a thing and I doubt we’ll see costs ever come back to investment transfers.

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You still pay pension fees even if you are not contributing anymore, I am sure anyone would take your close to retirement pension.

I am also sure that Freetrade will offer income drawdown in 10+ years so I don’t think this should be a concern for the average Freetrade user.

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I’m already at state retirement age, but have chosen not to take a pension yet. I too was thinking of transferring pension lump sums built up over the years to a Freetrade SIPP. My plan was to draw small amounts of cash from the SIPP as and when I need it, and I assumed, as part of the SIPP fees, this would be reported to Inland Revenue at the end of the tax year so I’d have 25% tax free and pay tax on the balance.
So from this thread it seems I can’t do this?
Seems a bit pointless transferring it all in if I have to to transfer it back out again in order to draw from it!

Appreciate it may not matter to most on the assumption it will be in place when they retire - but a timescale is a make or break for me.

There is currently no drawdown services provided by Freetrade. No doubt that will appear in the future. Vanguard had the same thing, no drawdown options when they first introduced their SIPP. However it was only a year i think before they offered drawdown options.

If you’re looking for a cheap SIPP and will need to drawdown soon, id recommend maybe having a look at Vanguard.

Anyone heard or seen any updates on this? I’m about to make a big move on my pension and really don’t want to have to sell all my stocks and move to another SIPP and then re-buy. Hoping and praying FT at least have a rough date or confirmation they will in the next X years offer it. :pray:

The majority of the Freetrade users are ‘younger’ so they’ll likely be prioritising other features before working in draw down. It’ll be available within a few years.

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You saying I’m old :rofl: I’d just be happy with it will be a option within say 10 years but until then I would struggle to trust bringing all my money across to FT.

Old is a state of mind!

You could always transfer you pension back out to a provider who has drawdown if FT haven’t offered it but I would be ugly surprised.

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