Vanguard SIPP

[Candellara]

Apologies in advance of this but my pension knowledge is somewhat limited so please go easy.

At the moment i have several pension plans (Scottish Eq, Prudential & NEST) and the Scottish Eq & Prudential pensions are very old plans that don't allow drawdown but do come with death benefits.

Should i be able to transfer these to the Vanguard SIPP although i assume i'd lose any death benefits etc and it'll no doubt come with financial penalties? And, after a read through the Vanguard info, the SIPP allows me to draw 25% tax free at 55 and any taxable draw downs thereafter?

Any advice would be welcomed as my IFA doesn't seem to be very forthcoming (as i assume he wouldn't earn out of it)

[thekingisdead]

Difficult to answer without seeing the full details but yes I think you’re broadly correct.

Leaving a scheme will forfeit any additional benefits (spousal, death benefits etc)
There shouldn’t be a penalty for transferring, possibly a small charge, but most are free these days.

If you’re not at fait with pensions it’s probably worth a session with an IFA (fixed fee?) to understand the pro’s and cons of switching.

Quite a bit to consider - fee’s investment performance (and investment options) plus any additional benefits.

[Candellara]

thekingisdead said:

Difficult to answer without seeing the full details but yes I think you’re broadly correct.

Leaving a scheme will forfeit any additional benefits (spousal, death benefits etc)
There shouldn’t be a penalty for transferring, possibly a small charge, but most are free these days.

If you’re not at fait with pensions it’s probably worth a session with an IFA (fixed fee?) to understand the pro’s and cons of switching.

Quite a bit to consider - fee’s investment performance (and investment options) plus any additional benefits.

The biggest issue i have is that i wish to draw down 25% at 55 (3 yrs time) and draw thereafter up to £12500 per year but none of the Scottish Eq or Prudential schemes facilitate this. I have to wait until i'm 67 so i've no real option but to transfer

[thekingisdead]

Could you do a partial transfer (maintain a small amount in your current pension and therefore the scheme benefits)

In our work scheme we can transfer out something like 90% of scheme value and still keep the account open for future accrual / benefits.
It’s a workplace DC scheme,

[Candellara]

thekingisdead said:

Could you do a partial transfer (maintain a small amount in your current pension and therefore the scheme benefits)

In our work scheme we can transfer out something like 90% of scheme value and still keep the account open for future accrual / benefits.
It’s a workplace DC scheme,

Good point. I'll need to contact the existing providers to see if this is a possibility. Has anyone any direct experience of Vanguard SIPPS? We've just transferred our ISA's to Vanguard and have been very impressed with the service so far

[Mazinbrum]

Depends how much is in your pot but if you take 25% tax free straight away what are you going to do with it? Fair enough if you’ve got plans but you can only invest 20k a year in an ISA. Look into crystallising amounts every year but not withdrawing it from the SIPP, eg you can crystallise 48k in a year, take 12k tax free and 12570 tax free as its within your allowance, leave the rest in your SIPP, you can repeat until SPA kicks in and use that to pay the tax, assuming your pot is big enough.
See https://youtu.be/AMJ8Ya3CPj4

[Candellara]

Mazinbrum said:

Depends how much is in your pot but if you take 25% tax free straight away what are you going to do with it? Fair enough if you’ve got plans but you can only invest 20k a year in an ISA. Look into crystallising amounts every year but not withdrawing it from the SIPP, eg you can crystallise 48k in a year, take 12k tax free and 12570 tax free as its within your allowance, leave the rest in your SIPP, you can repeat until SPA kicks in and use that to pay the tax, assuming your pot is big enough.
See https://youtu.be/AMJ8Ya3CPj4

Not a huge amount. About £250k but wished to take the 25% straight away and clear some final mortgage balances on a small BTL portfolio. I'll probably receive an income (not from BTL) until i'm 57 at which point i'll start to draw down 12k per year. How do you go about crystalizing 48k PA?

[Mazinbrum]

Candellara said:

Not a huge amount. About £250k but wished to take the 25% straight away and clear some final mortgage balances on a small BTL portfolio. I'll probably receive an income (not from BTL) until i'm 57 at which point i'll start to draw down 12k per year. How do you go about crystalizing 48k PA?

You’ve got a use for the 25% so you’re crystallising in one go, you can crystallise any amount each year until all your pot is crystallised.

[Candellara]

Mazinbrum said:

You’ve got a use for the 25% so you’re crystallising in one go, you can crystallise any amount each year until all your pot is crystallised.

Ah, ok i see.

[timberman]

Candellara said:

thekingisdead said:

Could you do a partial transfer (maintain a small amount in your current pension and therefore the scheme benefits)

In our work scheme we can transfer out something like 90% of scheme value and still keep the account open for future accrual / benefits.
It’s a workplace DC scheme,

Good point. I'll need to contact the existing providers to see if this is a possibility. Has anyone any direct experience of Vanguard SIPPS? We've just transferred our ISA's to Vanguard and have been very impressed with the service so far

My SIPP's with Vanguard and both my wife and I have also had an ISA each with them for some time

Transferring my Pension over to them was easy and took around 4 weeks to complete

I didn't hold any Vanguard funds in my old Pension, so it all had to be sold down and transferred as cash which meant I was out of the market for about a week while the transfer took place and the money was reinvested,
this was obviously a bit of a concern but the markets remained pretty stable during the transfer period so I didn't lose out on any gains or suffer any losses

I also took my 25% tax free after transferring which just involved filling in an online request form and arranging a couple of phone call consultations so that I could proceed to the next stage.

iirc, it took just over a week for the money to appear in my bank account after requesting the payment

Transferring for me was free of charge, ( Vanguard don't charge for transfers and neither did my previous Pension provider but yours may differ )

when requesting the transfer I chose which funds to invest in ( or I could have just picked one of their ready made retirement funds ) and once the money was available in my account they automatically invested it for me.

very happy with the service so far,

If you have any more questions feel free to ask.

[Candellara]

timberman said:

My SIPP's with Vanguard and both my wife and I have also had an ISA each with them for some time

Transferring my Pension over to them was easy and took around 4 weeks to complete

I didn't hold any Vanguard funds in my old Pension, so it all had to be sold down and transferred as cash which meant I was out of the market for about a week while the transfer took place and the money was reinvested,
this was obviously a bit of a concern but the markets remained pretty stable during the transfer period so I didn't lose out on any gains or suffer any losses

I also took my 25% tax free after transferring which just involved filling in an online request form and arranging a couple of phone call consultations so that I could proceed to the next stage.

iirc, it took just over a week for the money to appear in my bank account after requesting the payment

Transferring for me was free of charge, ( Vanguard don't charge for transfers and neither did my previous Pension provider but yours may differ )

when requesting the transfer I chose which funds to invest in ( or I could have just picked one of their ready made retirement funds ) and once the money was available in my account they automatically invested it for me.

very happy with the service so far,

If you have any more questions feel free to ask.

Thanks. What was your reasoning for transferring your existing pensions to a Vanguard SIPP? and did you simply call your existing provider to arrange the transfer? Also, did you lose any existing benefits or did you leave a small percentage in to retain them?

[JulianPH]

As other have said, Vanguard are a very good low cost provider and so your first bit of research work has come up trumps.

Do remember that you don't have to switch over the schemes with the death benefits until a few month before you want to take your tax free cash. This would allow you to retain the death benefits for longer, without impacting at all on your withdrawal plans.

You really need to find out exactly what the death benefits are though - and how important these could be for you. Equally, you need to look at the type of investments you hold in these old pensions.

They could be With Profits funds that are very close to paying a healthy Terminal Bonus at maturity (think loyaly bonus for staying until the end), which you would forego if you transferred out. They (particularly the Pru one) could also have minimum annual Reversionary Bonuses that you may wecome in the approach before you begin to draw down (as it keeps things smooth).

Also, you need to check for any guaranteed annuity rates that could offer better income prospects than drawdown (though without the drawdown flexibility).

Much of the above is now quite rare to find, but you would want to find out if you did have any before switching.

You don't need to pay an IFA for any of this, just contact each provider, ask them and then get them to put it in writing for you.

[Candellara]

JulianPH said:

As other have said, Vanguard are a very good low cost provider and so your first bit of research work has come up trumps.

Do remember that you don't have to switch over the schemes with the death benefits until a few month before you want to take your tax free cash. This would allow you to retain the death benefits for longer, without impacting at all on your withdrawal plans.

You really need to find out exactly what the death benefits are though - and how important these could be for you. Equally, you need to look at the type of investments you hold in these old pensions.

They could be With Profits funds that are very close to paying a healthy Terminal Bonus at maturity (think loyaly bonus for staying until the end), which you would forego if you transferred out. They (particularly the Pru one) could also have minimum annual Reversionary Bonuses that you may wecome in the approach before you begin to draw down (as it keeps things smooth).

Also, you need to check for any guaranteed annuity rates that could offer better income prospects than drawdown (though without the drawdown flexibility).

Much of the above is now quite rare to find, but you would want to find out if you did have any before switching.

You don't need to pay an IFA for any of this, just contact each provider, ask them and then get them to put it in writing for you.

Thanks Julian. Appreciate the input

[timberman]

Candellara said:

timberman said:

My SIPP's with Vanguard and both my wife and I have also had an ISA each with them for some time

Transferring my Pension over to them was easy and took around 4 weeks to complete

I didn't hold any Vanguard funds in my old Pension, so it all had to be sold down and transferred as cash which meant I was out of the market for about a week while the transfer took place and the money was reinvested,
this was obviously a bit of a concern but the markets remained pretty stable during the transfer period so I didn't lose out on any gains or suffer any losses

I also took my 25% tax free after transferring which just involved filling in an online request form and arranging a couple of phone call consultations so that I could proceed to the next stage.

iirc, it took just over a week for the money to appear in my bank account after requesting the payment

Transferring for me was free of charge, ( Vanguard don't charge for transfers and neither did my previous Pension provider but yours may differ )

when requesting the transfer I chose which funds to invest in ( or I could have just picked one of their ready made retirement funds ) and once the money was available in my account they automatically invested it for me.

very happy with the service so far,

If you have any more questions feel free to ask.

Thanks. What was your reasoning for transferring your existing pensions to a Vanguard SIPP? and did you simply call your existing provider to arrange the transfer? Also, did you lose any existing benefits or did you leave a small percentage in to retain them?

Reason for the transfer was mainly because both my wife and I had our pensions with the same provider so we decided to move one of them out as we didn't really like the idea of keeping all our eggs in one basket,

also Vanguards fees were lower which appealed to me,

there shouldn't be any need to call existing providers, just a case of filling out the online transfer forms with Vanguard and they take care of the rest,
(I did actually have to contact my existing provider due to someone on their end wrongly stating they didn't support transfers via Origo options which it clearly states on their website that they do, so I had to make a few phone calls to sort that out )

My pension was originally in a deferred final salary scheme,

after going through the transfer process I requested it be moved into my work place DC scheme till I retired to keep everything in one place,
I transferred again to Vanguard shortly before going into Drawdown

so no lost benefits and 100% was transferred.

[brman]

Mazinbrum said:

Depends how much is in your pot but if you take 25% tax free straight away what are you going to do with it? Fair enough if you’ve got plans but you can only invest 20k a year in an ISA. Look into crystallising amounts every year but not withdrawing it from the SIPP, eg you can crystallise 48k in a year, take 12k tax free and 12570 tax free as its within your allowance, leave the rest in your SIPP, you can repeat until SPA kicks in and use that to pay the tax, assuming your pot is big enough.
See https://youtu.be/AMJ8Ya3CPj4

I have nothing to add to this discussion but wanted to say thank you for posting that link! It is by far the clearest explanation of crystallisation, drawdown etc I have seen. I think I might have to watch some of his other videos

[mids]

Agreed ^^ That was very informative and well worth a watch.