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Vanguard SIPP

Including Financial Independence and Retiring Early (FIRE)
Joe45
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Vanguard SIPP

#319708

Postby Joe45 » June 19th, 2020, 10:45 am

Has anyone opened a Vanguard SIPP yet? The product was introduced earlier in the year and I'm interested to know how smooth the process has been, particularly over the pandemic.

I plan to move my SIPP to Vanguard once the product is established, and more importantly, when there is some clarity from Vanguard on drawdown as I expect to retire in the next tax year.

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Re: Vanguard SIPP

#319904

Postby Shaker » June 20th, 2020, 12:25 am

I'd hold fire for now, particularly if you intend to use the income for month to month spending - the drawdown setup is largely untested at this point in time. Stick with a more reputable, long-standing SIPP provider for the time being.

I think in the fullness of time, it will be a great SIPP offering.

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Re: Vanguard SIPP

#321459

Postby Joe45 » June 25th, 2020, 4:40 pm

Shaker wrote:I'd hold fire for now, particularly if you intend to use the income for month to month spending - the drawdown setup is largely untested at this point in time. Stick with a more reputable, long-standing SIPP provider for the time being.

I think in the fullness of time, it will be a great SIPP offering.

I'll need to start drawdown during the next tax year to take advantage of my personal income tax allowance (otherwise I'll lose it). I wonder if I will, in due course, be able to transfer away from one SIPP provider to another, even after drawdown has started. Any thoughts?

terminal7
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Re: Vanguard SIPP

#321484

Postby terminal7 » June 25th, 2020, 5:54 pm

You can transfer Sipps both uncrystallised and crystallised. Cash is easy - shares, funds etc can be transferred 'in specie' - but this is where there is a problem with Vanguard who only deal in a limited number of funds.

T7

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Re: Vanguard SIPP

#321501

Postby Alaric » June 25th, 2020, 6:22 pm

terminal7 wrote:You can transfer Sipps both uncrystallised and crystallised.


For no obvious reason.other than perhaps inefficiencies in the systems, transfers from one provider to another can take months. That is a potential problem for anyone in monthly drawdown, that the income could dry up whilst the assets are in a transit limbo.

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Re: Vanguard SIPP

#321502

Postby Shaker » June 25th, 2020, 6:26 pm

I can only echo what T7 has just said. Its nice having a cheap SIPP administrator, but more important they facilitate what you actually want/need them to do.

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Re: Vanguard SIPP

#321615

Postby xxd09 » June 26th, 2020, 12:36 am

When you come to draw your Pension monies at the moment with the Vanguard SIPP you can only
A ) Buy an annuity -who wants to do that nowadays ?
B) Transfer to another platform that would let you draw an income-complicated ,expensive time ,consuming etc etc!!!
No doubt Vanguard will come up to speed in time but currently their SIPP is a no no for most people
xxd09

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Re: Vanguard SIPP

#322195

Postby 1nvest » June 28th, 2020, 4:26 am

I did get the impression when I looked some time back that Vanguard UK weren't too keen to provide customer facing services, would for instance prefer you held one of their ETF's via another broker/provider rather than holding funds directly with them - perhaps at that time to keep costs down and enable them to focus more on the actual funds management aspect rather than customer service. Fees however do seem to be coming down (£375/year account fee now for £250K+ account value, which IIRC is a lot less than when I last looked), so perhaps there are now sufficient economies of scale for Vanguard UK.

To hold for instance a LifeStrategy 60/40 equity/bond looks to be a 0.37%/year ongoing cost, 0.42% first year cost (with purchase transaction cost). So £925/year on a ongoing £250,000 account value, which if that makes 4% real (after inflation) gain, £10,000/year, leaves you with 3.63% real (9.25% slice out of the gross real gain). They indicate that any cash in the account receives no interest, they keep the small amount of interest they receive.

Possible useful link : https://www.moneysavingexpert.com/savings/cheap-sipps/

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Re: Vanguard SIPP

#322216

Postby GeoffF100 » June 28th, 2020, 9:50 am

terminal7 wrote:You can transfer Sipps both uncrystallised and crystallised. Cash is easy - shares, funds etc can be transferred 'in specie' - but this is where there is a problem with Vanguard who only deal in a limited number of funds.

T7

Vanguard supported only cash transfers to a SIPP when I enquired a few months ago. They said that they had received other requests for in specie transfers, and it was possible that facility might be added in the next year.

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Re: Vanguard SIPP

#322219

Postby GeoffF100 » June 28th, 2020, 10:01 am

1nvest wrote:I did get the impression when I looked some time back that Vanguard UK weren't too keen to provide customer facing services, would for instance prefer you held one of their ETF's via another broker/provider rather than holding funds directly with them - perhaps at that time to keep costs down and enable them to focus more on the actual funds management aspect rather than customer service. Fees however do seem to be coming down (£375/year account fee now for £250K+ account value, which IIRC is a lot less than when I last looked), so perhaps there are now sufficient economies of scale for Vanguard UK.

To hold for instance a LifeStrategy 60/40 equity/bond looks to be a 0.37%/year ongoing cost, 0.42% first year cost (with purchase transaction cost). So £925/year on a ongoing £250,000 account value, which if that makes 4% real (after inflation) gain, £10,000/year, leaves you with 3.63% real (9.25% slice out of the gross real gain). They indicate that any cash in the account receives no interest, they keep the small amount of interest they receive.

Possible useful link : https://www.moneysavingexpert.com/savings/cheap-sipps/

The cap has not changed. I am fortunate to have a free account with Vanguard, having been one of their direct investors when there was £100K minimum per fund.

I believe that Vanguard is keen to recruit investors to their direct online service, but they do not want to upset resellers. Vanguard is prompt at responding to secure messages, but does not give out a telephone number. I had to send them a secure message to get a postal address for my records.

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Re: Vanguard SIPP

#322222

Postby scrumpyjack » June 28th, 2020, 10:16 am

I have my drawdown Sipp with HL and the fee is capped at £200 pa. You can of course buy the Vanguard ETFs in an HL Sipp. ETFs like the Vanguard ones do not attract any 'fund' fee at HL as they are treated as shares.

Not sure why one would pay 375 to have it with Vanguard?

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Re: Vanguard SIPP

#322263

Postby GeoffF100 » June 28th, 2020, 1:15 pm

scrumpyjack wrote:I have my drawdown Sipp with HL and the fee is capped at £200 pa. You can of course buy the Vanguard ETFs in an HL Sipp. ETFs like the Vanguard ones do not attract any 'fund' fee at HL as they are treated as shares.

Not sure why one would pay 375 to have it with Vanguard?

You pay the spread and a dealing fee to trade ETFs. (Vanguard does not charge a dealing fee ETFs unless you want to trade in real time.) ETFs can also trade at a discount or premium, which may work against you. If your trade exceeds the Exchange Market Size, you may not be able to deal at quote on large quantities. If your dividends are paid in dollars, you have to pay a commission to convert them (I believe there is no commission with Vanguard). OEICs and Units Trusts avoid these problems.

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Re: Vanguard SIPP

#337198

Postby paulnumbers » August 31st, 2020, 5:22 pm

GeoffF100 wrote:
terminal7 wrote:You can transfer Sipps both uncrystallised and crystallised. Cash is easy - shares, funds etc can be transferred 'in specie' - but this is where there is a problem with Vanguard who only deal in a limited number of funds.

T7

Vanguard supported only cash transfers to a SIPP when I enquired a few months ago. They said that they had received other requests for in specie transfers, and it was possible that facility might be added in the next year.


Vanguard will be obligated to facilitate in-specie transfers beginning 1st Feb 2021 (unless the FCA delay it again)

https://www.fca.org.uk/publications/pol ... inal-rules

Kind of annoying that they will not do in-specie transfers right now for Vanguard held funds!

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Re: Vanguard SIPP

#337223

Postby ReallyVeryFoolish » August 31st, 2020, 6:46 pm

scrumpyjack wrote:I have my drawdown Sipp with HL and the fee is capped at £200 pa. You can of course buy the Vanguard ETFs in an HL Sipp. ETFs like the Vanguard ones do not attract any 'fund' fee at HL as they are treated as shares.

Not sure why one would pay 375 to have it with Vanguard?

Indeed, not least because from October 1st, Interactive Investor have reduced the fees they charge on a drawdown SIPP to just £10 per month. A grand total of £120 no matter how large your SIPP pot gets.

RVF

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Re: Vanguard SIPP

#337238

Postby GeoffF100 » August 31st, 2020, 7:31 pm

paulnumbers wrote:
GeoffF100 wrote:
terminal7 wrote:You can transfer Sipps both uncrystallised and crystallised. Cash is easy - shares, funds etc can be transferred 'in specie' - but this is where there is a problem with Vanguard who only deal in a limited number of funds.

T7

Vanguard supported only cash transfers to a SIPP when I enquired a few months ago. They said that they had received other requests for in specie transfers, and it was possible that facility might be added in the next year.

Vanguard will be obligated to facilitate in-specie transfers beginning 1st Feb 2021 (unless the FCA delay it again)

https://www.fca.org.uk/publications/pol ... inal-rules

Kind of annoying that they will not do in-specie transfers right now for Vanguard held funds!

Thank you very much for that. Lets hope it happens.

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Re: Vanguard SIPP

#344107

Postby 2boi » October 1st, 2020, 2:14 am

Has anyone opened a Vanguard SIPP yet?

Yes I opened one in February but it has sat with zero balance while I try and transfer a Prudential pension. Vanguard seem very efficient and helpful, almost as good as Close Brothers who manage my main SIPP. Their web platform is great to use. Main selling point of course is their charges.

Prudential were charging 1% an year for a Prudential fund that invested wholly in another fund, M&G, which also pocketed 1% . So total 2% a year fees, half of which was hidden! Is this legal?

Incidentally I see the various Vanguard 'LifeStrategy' funds invest wholly in other Vanguard funds. So I assume they are doing the same as Prudential - double charging, is that correct? Albeit on a more modest scale. If so, why wouldn't one just look at the Lifestrategy portfolio breakdown and invest directly in those Vanguard funds, saving 0.22% in charges?

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Re: Vanguard SIPP

#344108

Postby Shaker » October 1st, 2020, 2:23 am

2boi wrote:
Incidentally I see the various Vanguard 'LifeStrategy' funds invest wholly in other Vanguard funds. So I assume they are doing the same as Prudential - double charging, is that correct? Albeit on a more modest scale. If so, why wouldn't one just look at the Lifestrategy portfolio breakdown and invest directly in those Vanguard funds, saving 0.22% in charges?


A fund OCF contains the ongoing costs of the underlying instruments within it, so if you have a fund with holdings in another fund, that is also taken into account.

A Lifestrategy fund is basically a basket of vanguard funds, with ongoing charges ranging from 0-0.3%, which, when weighted averaged out, comes to 0.22%pa.

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Re: Vanguard SIPP

#344131

Postby TedSwippet » October 1st, 2020, 9:24 am

2boi wrote:
Has anyone opened a Vanguard SIPP yet?

Prudential were charging 1% an year for a Prudential fund that invested wholly in another fund, M&G, which also pocketed 1% . So total 2% a year fees, half of which was hidden! Is this legal?

They almost certainly were not doing this. As already noted by Shaker above, the OCF quoted for a fund-of-funds has to include the full costs of everything it holds.

That aside, even 1% is a touch pricey these days, when you consider that Vanguard, HSBC, L&G and others offer funds and ETFs at below -- and sometimes well below -- 0.25%. Don't forget however that Vanguard has a 0.15% platform fee (capped), so you will need to add that to your fund or ETF charges to find your actual yearly costs.

2boi wrote:If so, why wouldn't one just look at the Lifestrategy portfolio breakdown and invest directly in those Vanguard funds, saving 0.22% in charges?

As it turns out, you can usually save something in costs by using the components of a Lifestrategy fund rather than the single fund itself, but of course with an increase in complexity (and also flexibility). Your saving will not be 0.22% though. Perhaps more on the order of 0.05-0.1% or so, from memory.

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Re: Vanguard SIPP

#344209

Postby 2boi » October 1st, 2020, 2:28 pm

Shakerwrote:
A fund OCF contains the ongoing costs of the underlying instruments within it, so if you have a fund with holdings in another fund, that is also taken into account.

Thanks that coincides with what Vanguard say. However on Perpetual I did work the actual charges and I'm pretty sure the charges came to 2% - 1% for the Prudential long dated corp bond fund and 1% for the M&G long dated corporate bond fund, which the former was 100% invested in. Prudential OCF was 1%, not 2%.

Maybe I got it wrong (it was a pain to calculate and I don't want to revisit it) but if I was wrong then M&G were giving their bond to Prudential for free. Or Prudential were not making anything. Does that happen? I can see a provider would waive charges on their own sub funds but 2 different suppliers?

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Re: Vanguard SIPP

#344283

Postby 2boi » October 1st, 2020, 6:50 pm

Ah I see Prudential acquired M&G in 1999 so they are the same group. Still I'm sure the total charges came to 2%.

Update: Then they demerged in October 2019.


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