Pension payment problems with H&L
Discussion
I have my SIPP with Hargeaves and Lansdown.
Most of it is invested in funds, with a 20k cash buffer for paying my monthly pension. I didn’t receive a pension payment at the end of July due to "insufficient funds".
Around the time I was due to be paid I placed an instruction to sell one fund and buy another (it's a standard feature). Something like sell 30k of fund A, and use that to buy fund B. You don't need any cash in your account to do this as the money for B, comes from the sale of A.
H&L are telling me that the sale of A wasn't cleared funds before THEY bought B, therefore I didn’t have any cash available at the time my pension was to be paid. This seems very off because the A to B transaction doesn't need any cash to be available, and my account showed 20k cash at all times.
I've asked them to do a manual payment but they have refused saying I'll have to wait until my next pension payment.
Do all pension funds work this way? By that I mean only have one day a month they will pay cash out.
Most of it is invested in funds, with a 20k cash buffer for paying my monthly pension. I didn’t receive a pension payment at the end of July due to "insufficient funds".
Around the time I was due to be paid I placed an instruction to sell one fund and buy another (it's a standard feature). Something like sell 30k of fund A, and use that to buy fund B. You don't need any cash in your account to do this as the money for B, comes from the sale of A.
H&L are telling me that the sale of A wasn't cleared funds before THEY bought B, therefore I didn’t have any cash available at the time my pension was to be paid. This seems very off because the A to B transaction doesn't need any cash to be available, and my account showed 20k cash at all times.
I've asked them to do a manual payment but they have refused saying I'll have to wait until my next pension payment.
Do all pension funds work this way? By that I mean only have one day a month they will pay cash out.
My “private” pension/s are held completely in funds and then monthly a few units are sold ( pro rata ) to pay me my monthly salary as it were.
At the beginning of the tax year I agree what annualised drawdown I want and this money in the form of units is placed in a second account whilst remaining fully invested.
Yes there is a chance of a shortfall but equally there is a chance of a surplus.
At no point is there a need to keep any form of cash buffer.
Obviously whether this is even possible with HL I know not !
At the beginning of the tax year I agree what annualised drawdown I want and this money in the form of units is placed in a second account whilst remaining fully invested.
Yes there is a chance of a shortfall but equally there is a chance of a surplus.
At no point is there a need to keep any form of cash buffer.
Obviously whether this is even possible with HL I know not !
alscar said:
My “private” pension/s are held completely in funds and then monthly a few units are sold ( pro rata ) to pay me my monthly salary as it were.
At the beginning of the tax year I agree what annualised drawdown I want and this money in the form of units is placed in a second account whilst remaining fully invested.
Yes there is a chance of a shortfall but equally there is a chance of a surplus.
At no point is there a need to keep any form of cash buffer.
Obviously whether this is even possible with HL I know not !
Who's that with? At the beginning of the tax year I agree what annualised drawdown I want and this money in the form of units is placed in a second account whilst remaining fully invested.
Yes there is a chance of a shortfall but equally there is a chance of a surplus.
At no point is there a need to keep any form of cash buffer.
Obviously whether this is even possible with HL I know not !
With H&L it's one account and I need to make sure the cash is available. If its not then you don't get paid your pension. I have fallen foul of this hence having the 20k cash buffer.
What's really odd is for a fund to fund sale and purchase they don't need you to hold any cash to cover it, but if you do have cash in the account then it somehow gets included, at the expense of your pension payment.
It wouldn't be so bad if they could simply pay you a day later, but it appears that's something they will only do in exceptional circumstances.
Given H&L have some of the highest charges I would have expected them to be more flexible or have better functionality. Yours sounds better.
Withdrawals go through monthly payroll so unfortunately yes, it is just once a month.
Strictly speaking it's true you didn't have cleared funds as there was a debt to buy the new fund. However, the money for that purchase was known and should have left the £20,000 clear. Guess it's something to be aware of going forwards.
Strictly speaking it's true you didn't have cleared funds as there was a debt to buy the new fund. However, the money for that purchase was known and should have left the £20,000 clear. Guess it's something to be aware of going forwards.
steve_n said:
Withdrawals go through monthly payroll so unfortunately yes, it is just once a month.
Strictly speaking it's true you didn't have cleared funds as there was a debt to buy the new fund. However, the money for that purchase was known and should have left the £20,000 clear. Guess it's something to be aware of going forwards.
The thing is there is no requirement to have cash to cover it, if there was then the "switch to another fund" option wouldn't serve any purpose. It does the transactions in sequence not parallel, which you wouldn't need if you had the funds to cover the purchase. Thats why you're not limited to your cash balance when using that option.Strictly speaking it's true you didn't have cleared funds as there was a debt to buy the new fund. However, the money for that purchase was known and should have left the £20,000 clear. Guess it's something to be aware of going forwards.
I'm going to switch the pension to another provider so its not something that should be an issue in the future. That's why I want to know if all operate the same way.
Getting my pension paid is my priority. I'm completing on a property in 15 says and not having my pension paid leaves me with a big hole in my finances.
98elise said:
Who's that with?
With H&L it's one account and I need to make sure the cash is available. If its not then you don't get paid your pension. I have fallen foul of this hence having the 20k cash buffer.
What's really odd is for a fund to fund sale and purchase they don't need you to hold any cash to cover it, but if you do have cash in the account then it somehow gets included, at the expense of your pension payment.
It wouldn't be so bad if they could simply pay you a day later, but it appears that's something they will only do in exceptional circumstances.
Given H&L have some of the highest charges I would have expected them to be more flexible or have better functionality. Yours sounds better.
I won’t be popular for saying so but mine is with SJP so I imagine my charges also remain higher than HL’s. With H&L it's one account and I need to make sure the cash is available. If its not then you don't get paid your pension. I have fallen foul of this hence having the 20k cash buffer.
What's really odd is for a fund to fund sale and purchase they don't need you to hold any cash to cover it, but if you do have cash in the account then it somehow gets included, at the expense of your pension payment.
It wouldn't be so bad if they could simply pay you a day later, but it appears that's something they will only do in exceptional circumstances.
Given H&L have some of the highest charges I would have expected them to be more flexible or have better functionality. Yours sounds better.
That said the process they have set up works a treat.
Monthly “ payslips “ arrive and obviously the end of year tax cert.
Pensions can be structured in so many different ways the OPs question is difficult to answer. My income comes from a raft of structured products that are designed to “mature” every 6 months.
I always have enough cash to pay the monthly amount so there is no need to switch or de-invest anything.
I always have enough cash to pay the monthly amount so there is no need to switch or de-invest anything.
98elise said:
The thing is there is no requirement to have cash to cover it, if there was then the "switch to another fund" option wouldn't serve any purpose. It does the transactions in sequence not parallel, which you wouldn't need if you had the funds to cover the purchase. Thats why you're not limited to your cash balance when using that option.
I'm going to switch the pension to another provider so its not something that should be an issue in the future. That's why I want to know if all operate the same way.
Getting my pension paid is my priority. I'm completing on a property in 15 says and not having my pension paid leaves me with a big hole in my finances.
It'll be similar practice across the board.I'm going to switch the pension to another provider so its not something that should be an issue in the future. That's why I want to know if all operate the same way.
Getting my pension paid is my priority. I'm completing on a property in 15 says and not having my pension paid leaves me with a big hole in my finances.
If you call up and explain the circumstances I'm sure they'd make an exception to allow an ad hoc payment, especially if they were going to lose someone over it.
Mazinbrum said:
I missed a pension payment once due to not having enough cash in my SIPP but Interactive Investor arranged an ad hoc payment once cash was sorted.
I tried that, and they said no. I'm amazed that a pension provider doesn't prioritise paying a pension on time. Having a 20k cash buffer was enough to pay for the next 8 months payments without selling any more stock/funds.
As I understand it if there isn't enough cash to pay their fees they will automatically sell some stocks and funds to make sure THEY get paid on time.
steve_n said:
98elise said:
The thing is there is no requirement to have cash to cover it, if there was then the "switch to another fund" option wouldn't serve any purpose. It does the transactions in sequence not parallel, which you wouldn't need if you had the funds to cover the purchase. Thats why you're not limited to your cash balance when using that option.
I'm going to switch the pension to another provider so its not something that should be an issue in the future. That's why I want to know if all operate the same way.
Getting my pension paid is my priority. I'm completing on a property in 15 says and not having my pension paid leaves me with a big hole in my finances.
It'll be similar practice across the board.I'm going to switch the pension to another provider so its not something that should be an issue in the future. That's why I want to know if all operate the same way.
Getting my pension paid is my priority. I'm completing on a property in 15 says and not having my pension paid leaves me with a big hole in my finances.
If you call up and explain the circumstances I'm sure they'd make an exception to allow an ad hoc payment, especially if they were going to lose someone over it.
craig1912 said:
Pensions can be structured in so many different ways the OPs question is difficult to answer. My income comes from a raft of structured products that are designed to “mature” every 6 months.
I always have enough cash to pay the monthly amount so there is no need to switch or de-invest anything.
It's a simple SIPP Account. The majority is invested in funds with 20k in cash to pay my monthly pension. When the cash gets low I just need to sell some units to top it up.I always have enough cash to pay the monthly amount so there is no need to switch or de-invest anything.
alscar said:
98elise said:
Who's that with?
With H&L it's one account and I need to make sure the cash is available. If its not then you don't get paid your pension. I have fallen foul of this hence having the 20k cash buffer.
What's really odd is for a fund to fund sale and purchase they don't need you to hold any cash to cover it, but if you do have cash in the account then it somehow gets included, at the expense of your pension payment.
It wouldn't be so bad if they could simply pay you a day later, but it appears that's something they will only do in exceptional circumstances.
Given H&L have some of the highest charges I would have expected them to be more flexible or have better functionality. Yours sounds better.
I won’t be popular for saying so but mine is with SJP so I imagine my charges also remain higher than HL’s. With H&L it's one account and I need to make sure the cash is available. If its not then you don't get paid your pension. I have fallen foul of this hence having the 20k cash buffer.
What's really odd is for a fund to fund sale and purchase they don't need you to hold any cash to cover it, but if you do have cash in the account then it somehow gets included, at the expense of your pension payment.
It wouldn't be so bad if they could simply pay you a day later, but it appears that's something they will only do in exceptional circumstances.
Given H&L have some of the highest charges I would have expected them to be more flexible or have better functionality. Yours sounds better.
That said the process they have set up works a treat.
Monthly “ payslips “ arrive and obviously the end of year tax cert.
98elise said:
I have my SIPP with Hargeaves and Lansdown.
Most of it is invested in funds, with a 20k cash buffer for paying my monthly pension. I didn’t receive a pension payment at the end of July due to "insufficient funds".
Around the time I was due to be paid I placed an instruction to sell one fund and buy another (it's a standard feature). Something like sell 30k of fund A, and use that to buy fund B. You don't need any cash in your account to do this as the money for B, comes from the sale of A.
H&L are telling me that the sale of A wasn't cleared funds before THEY bought B, therefore I didn’t have any cash available at the time my pension was to be paid. This seems very off because the A to B transaction doesn't need any cash to be available, and my account showed 20k cash at all times.
I've asked them to do a manual payment but they have refused saying I'll have to wait until my next pension payment.
Do all pension funds work this way? By that I mean only have one day a month they will pay cash out.
To directly answer your question, HL is wrong and that is the end of the matter.Most of it is invested in funds, with a 20k cash buffer for paying my monthly pension. I didn’t receive a pension payment at the end of July due to "insufficient funds".
Around the time I was due to be paid I placed an instruction to sell one fund and buy another (it's a standard feature). Something like sell 30k of fund A, and use that to buy fund B. You don't need any cash in your account to do this as the money for B, comes from the sale of A.
H&L are telling me that the sale of A wasn't cleared funds before THEY bought B, therefore I didn’t have any cash available at the time my pension was to be paid. This seems very off because the A to B transaction doesn't need any cash to be available, and my account showed 20k cash at all times.
I've asked them to do a manual payment but they have refused saying I'll have to wait until my next pension payment.
Do all pension funds work this way? By that I mean only have one day a month they will pay cash out.
If your instruction (which I do not doubt) was to sell A to buy B then anything outside of A (be that cash or holdings in C, D or E) are completely irrelevant.
HL have made a mistake (it is their responsibility to ensure they have the proceeds from the sale of A before purchasing B) and if they do not acknowledge this and put it right (and offer some token compensation for giving you the wrong information and causing you concern) then you should tell them to treat this as a formal complaint.
JulianPH said:
To directly answer your question, HL is wrong and that is the end of the matter.
You may be correct, althougth the second paragraph on their fact sheet appears to warn about this scenario.HL Fact sheet on Managing drawdown income and fees said:
Beware of fund switching when you’re due an income payment. If you give an instruction to sell an investment and reinvest the proceeds at the same time (e.g. a fund switch), and you’re expecting a drawdown income payment, you may get less than you expect. This is because we use any available cash to cover the cost of the reinvestment while the sale is being processed. To avoid this, you might want to wait until you receive your income payment before giving an investment instruction of this kind.
Only just started a drawdown so had noticed it in their SIPP Drawdown/ Drawdown information tab.JulianPH said:
98elise said:
I have my SIPP with Hargeaves and Lansdown.
Most of it is invested in funds, with a 20k cash buffer for paying my monthly pension. I didn’t receive a pension payment at the end of July due to "insufficient funds".
Around the time I was due to be paid I placed an instruction to sell one fund and buy another (it's a standard feature). Something like sell 30k of fund A, and use that to buy fund B. You don't need any cash in your account to do this as the money for B, comes from the sale of A.
H&L are telling me that the sale of A wasn't cleared funds before THEY bought B, therefore I didn’t have any cash available at the time my pension was to be paid. This seems very off because the A to B transaction doesn't need any cash to be available, and my account showed 20k cash at all times.
I've asked them to do a manual payment but they have refused saying I'll have to wait until my next pension payment.
Do all pension funds work this way? By that I mean only have one day a month they will pay cash out.
To directly answer your question, HL is wrong and that is the end of the matter.Most of it is invested in funds, with a 20k cash buffer for paying my monthly pension. I didn’t receive a pension payment at the end of July due to "insufficient funds".
Around the time I was due to be paid I placed an instruction to sell one fund and buy another (it's a standard feature). Something like sell 30k of fund A, and use that to buy fund B. You don't need any cash in your account to do this as the money for B, comes from the sale of A.
H&L are telling me that the sale of A wasn't cleared funds before THEY bought B, therefore I didn’t have any cash available at the time my pension was to be paid. This seems very off because the A to B transaction doesn't need any cash to be available, and my account showed 20k cash at all times.
I've asked them to do a manual payment but they have refused saying I'll have to wait until my next pension payment.
Do all pension funds work this way? By that I mean only have one day a month they will pay cash out.
If your instruction (which I do not doubt) was to sell A to buy B then anything outside of A (be that cash or holdings in C, D or E) are completely irrelevant.
HL have made a mistake (it is their responsibility to ensure they have the proceeds from the sale of A before purchasing B) and if they do not acknowledge this and put it right (and offer some token compensation for giving you the wrong information and causing you concern) then you should tell them to treat this as a formal complaint.
I definitely used the switch to other fund option. It's a standard feature for selling and reinvesting.
There is no need to have a cash buffer for purchase because they do the transactions in sequence.
davepen said:
JulianPH said:
To directly answer your question, HL is wrong and that is the end of the matter.
You may be correct, althougth the second paragraph on their fact sheet appears to warn about this scenario.HL Fact sheet on Managing drawdown income and fees said:
Beware of fund switching when you’re due an income payment. If you give an instruction to sell an investment and reinvest the proceeds at the same time (e.g. a fund switch), and you’re expecting a drawdown income payment, you may get less than you expect. This is because we use any available cash to cover the cost of the reinvestment while the sale is being processed. To avoid this, you might want to wait until you receive your income payment before giving an investment instruction of this kind.
Only just started a drawdown so had noticed it in their SIPP Drawdown/ Drawdown information tab.You would have thought a SIPP with a monthly drawdown would prioritise those payments, especially when they won’t do an adhoc payment.
A the very least pop up a warning when placing a fund switch instruction. It would be a few lines of code to sort.
98elise said:
The odd thing is they don't require a cash buffer to do a fund switch. If you did then the switch option serves no purpose. You could buy and sell in parallel. Sounds like if its there, they will use it.
You would have thought a SIPP with a monthly drawdown would prioritise those payments, especially when they won’t do an adhoc payment.
A the very least pop up a warning when placing a fund switch instruction. It would be a few lines of code to sort.
As you say, the fact you have money in a cash account is completely irrelevant. You would have thought a SIPP with a monthly drawdown would prioritise those payments, especially when they won’t do an adhoc payment.
A the very least pop up a warning when placing a fund switch instruction. It would be a few lines of code to sort.
You clearly instructed a switch from A to B, not a purchase from cash. They did not follow this (automated) instruction, but instead carried out a cash purchase you had not instructed.
It really is clear cut.
davepen said:
JulianPH said:
To directly answer your question, HL is wrong and that is the end of the matter.
You may be correct, althougth the second paragraph on their fact sheet appears to warn about this scenario.HL Fact sheet on Managing drawdown income and fees said:
Beware of fund switching when you’re due an income payment. If you give an instruction to sell an investment and reinvest the proceeds at the same time (e.g. a fund switch), and you’re expecting a drawdown income payment, you may get less than you expect. This is because we use any available cash to cover the cost of the reinvestment while the sale is being processed. To avoid this, you might want to wait until you receive your income payment before giving an investment instruction of this kind.
Only just started a drawdown so had noticed it in their SIPP Drawdown/ Drawdown information tab.I can't for the life of me why they would operate such a system though. Fund switches should not touch the payroll system for income payments.
I take back what I said about it being clear for the OP though.
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