Find out how we divide your drawdown and non-drawdown pots when you start taking funds from your SIPP.
We do not physically divide your SIPP assets
At ii we do not force our customers to split their SIPP physical assets into drawdown and non-drawdown pots, also known as crystallised and uncrystallised accounts. Instead, all of the different assets that you hold in your SIPP (shares, funds, cash, etc) are held within a single SIPP account.
This means that when you come to sell stock to fund a withdrawal from your account, such as a tax-free lump sum or a regular income payment, you would be free to sell whichever assets you wanted and wouldn’t be restricted to those in a certain pot.
When we use notional splits
If your SIPP is partially crystallised so that you hold both crystallised funds in a drawdown pot and uncrystallised funds in a non-drawdown pot, your SIPP fund will be notionally split into two distinct components: the drawdown pot and the non-drawdown pot. We then assign a value to each pot without assigning specific assets.
How does a notional split work?
With a notional split, any investment growth or investment decrease will be split proportionately across the drawdown and non-drawdown pots in your SIPP.
Any contributions to a SIPP are added to the non-drawdown pot and most withdrawals such as Pension Commencement Lump Sums (PCLS), or Income payments will be deducted from your drawdown pot.
An Uncrystallised Funds Pension Lump Sum (UFPLS) withdrawal would be taken from the non-drawdown pot. Any transfers into your SIPP from another pension provider will be allocated to the relevant part of your SIPP dependant on whether they were held as crystallised/drawdown or uncrystallised/non-drawdown at your previous provider.
Every time funds are added to or withdrawn from your SIPP account, we will recalculate the split between the drawdown and non-drawdown pots to ensure the calculation remains correct.
Examples of the notional split in practice
The following examples show what happens to the split of a SIPP between the drawdown and non-drawdown pots when various actions take place on the account. Of course, in reality there will also be daily movements in share prices which mean that the value of a SIPP changes every day too.
Notional split FAQs
Commonly asked questions about notional split
How can Pension Wise help?
If you have a defined contribution pension scheme and are 50 or over, then you can access free, impartial guidance on your pension options by booking a face to face or telephone appointment with Pension Wise, a service from MoneyHelper.
If you are under 50, you can still access free, impartial help and information about your pensions from MoneyHelper.