My thoughts on the Vanguard SIPP

This week is a big deal for many wealth-builders because it marks the official release of a pension plan by Vanguard, the darling of the FIRE movement. I want to go over the basic specs of the plan, and provide a little bit of balance…

[@tomfisher7751]

Great video. I'm 25 and I'm using vanguard target retirement 2055. However I'm also investing with VWRL.

[@tlangdon12]

That's a good start Tom, but do heed Pete's advice that a Target Retirement Fund is a poor choice for most UK investors. There is no urgency to move away from the fund you are currently invested in, they won't start to shift your funds to "safer" funds until 2045 at the earliest, but I would not leave the investments in the Target Retirement Fund after you are 45. You aim should be to use the next 20 years to learn about how the funds you have work. Once you understand this you will be better placed to pick the right funds for you when it is time to do so.

[@tomfisher7751]

@@tlangdon12 a lot has changed since this comment, I am in 100% equities for my SIPP now

[@craigross341]

3:45 Exactly. The "natural yield" on (say) the FTSE 100 is better than annuity rates (certainly for younger folk), and while there are risks in dividend cuts there are risks in annuities.

[@CraigRobinson1979]

Thanks for this. I have just transferred into Vanguard from a managed funds with much higher fees after reading "I will teach you how to be rich" and before I came across this video. It feels like I made the right move.

[@blah4306]

Hi Craig I'm thinking of doing this but not sure what funds to use for my SIPP

[@CraigRobinson1979]

@@blah4306 Depends on your age. If you are in your 30's maybe just a fund that tracks the stock market. If older they do a dedicated retirement year fund that moves investments to bonds from stocks the course you get to retirement.

[@blah4306]

@@CraigRobinson1979 cheers pal

[@minorcadence1]

Hi, I am a *very* lazy investor and like the idea of lifestyle sipp and buying an annuity when I retire. Curious to learn more about why most people don't do this in the UK, and why it may or may not be a good idea.

[@PeteMatthew]

Simple answer re annuity: it's an income for life, but that timescale is unknown. Plus with drawdown, if there's any pension fund left when you die, it. an be left to your beneficiaries, so much more flexible. But with flexibility comes risk. Each to their own; there is no right answer for all people - lots of options, and you have to pick the one which works best for you.

[@tlangdon12]

Annuities offer very poor value for money. If I had used my pension to buy an annuity, i would have to live on £6,000 a year (something I couldn't do). By leaving my money invested in the stockmarkets, I can draw out £16,000 a year. I, too, am a very lazy investor. When I retired, I bought a portfolio of mainly income-producing funds that I intend, for the most part, to keep until I die. I get just over 4% yield pa on the investments and they are now worth 11% more than I paid for them three years ago.

[@sgcornfield]

Hi Pete - I really enjoy your Channel and meaningful money podcasts 👍. As a potential idea for a show , if there is any update on your views now the vanguard SIPP has been going some time, that would be great . Many thanks again.

[@FreeyourFinance]

Great content as always, Pete. I hope you're well mate. Don't shoot me, I have never had a pension until this year (i'm now 30). Instead I have been maxing my ISA each year, and have purchased some BTL's. You will be pleased to hear I have now opened a SIPP with Vanguard and I am investing in it!

[@marcusnelson1239]

Are you a higher rate tax payer? How easy is it to claim back the tax relief and do you have to wait until the end of the financial year?

[@y0rkiebar]

I believe Vanguard now support flexi-access drawdown and UFPLS from their SIPP.

[@stuartnicklin4101]

So where do i take my sipp? Who do you reccomend i am willing to go high risk.

[@grandmasterlucien]

What do you make of the NEST pension scheme compared to having a SIPP?

[@MeaningfulMoney]

Think of it as the Tesco Value of the pensions world. It'll serve, but doesn't give you the options of a decent SIPP or platform pension. But if you're employed, your employer won't redirect your pension contributions into a SIPP, so you'll either need to make partial transfers from NEST to the SIPP each year or just move the money when you leave your employer. In the meantime, search my channel for videos on NEST

[@grandmasterlucien]

@@MeaningfulMoney Thanks mate

[@samr8603]

Thanks for the video. The Retirement funds are good but I see your point on the drawdown. Problem is selecting which of the individual funds for investing as they deal with select markets. I like the fact the Life Strategy and Retirement funds go across a big mixture of different international funds.

[@MeaningfulMoney]

LifeStrategy is great for a fire-and-forget investing. Takes the effort out of it, and I’m all for that!

[@denizpaull]

I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $300,000. ' John Steven Barr' is among the most accomplished portfolio managers in the industry, widely acknowledged for his outstanding work. I highly recommend taking a closer look at his impressive portfolio.

[@jan2000nl]

I know this is an old video, but if anyone is still watching, what is meant by at retirement functionality? Isn’t it just selling investment as needed that any SIPP allows?

[@MeaningfulMoney]

Flexi-access drawdown, UFPLS - things like that. Flexible retirement income options.

[@jan2000nl]

@@MeaningfulMoney Thanks a lot Pete. Really great channel and you have been a key person that has put me on a path to financial freedom. Started late but catching up quickly. Sorry one last related question, I guess these drawdown options are still not available via Vanguard? I have 10-12 years to go to retirement. Let’s hope Vanguard has it in place by then!

[@thomaswilkinson6101]

Do you know anything about purchasing alternative investments with a SIPP? I've been trying understand the process of buying forestry via a SIPP but it seems like the details are pretty sparse. I'd love to know a bit more about it all.

[@MeaningfulMoney]

You’ll need a ‘full’ SIPP from a specialist provider, rather than a bog-standard platform SIPP. Suggest you give the good people at www.dapco.co.uk/ a call. That’s not a recommendation, just a suggestion. Other SIPP providers may serve you better.

[@thomaswilkinson6101]

@@MeaningfulMoney Thank you, really hard to know where to start with it! Will research further and have a look. Thanks!

[@piano_man]

Good to see a video instead of the podcast…face to a name 👍👍

[@Chanesmyname]

Love the “don’t sue me” comment….had me listening for a reason to do so. 😀 I am joking!

[@MeaningfulMoney]

Phew! I have to be soooo careful…

[@iozel4633]

Thanks for the video. I just read an article on The Times website that refers to "it's [Vanguard's] drawdown pension plan" - does this mean it now has the 'at retirement' functionality? - sorry if it sounds like a stupid question but I just wanted to make sure I'm not miss-understanding the terms used. Thanks

[@MeaningfulMoney]

Yes it does. I think that started in 2019 - and not before time!

[@carlhoward9527]

Lifestrategy range is heard to beat IMHO either in an ISA or SIPP. 37bps for passive style investment with asset allocation overlay

[@MeaningfulMoney]

Totally agree

[@Eli-vf7io]

LS underperforms global funds, due to its UK home bias

[@tlangdon12]

@@Eli-vf7io So a good strategy might be to invest some money into LS and some in VWRL or similar.

[@Eli-vf7io]

@@tlangdon12 if you are going to do that, you don’t need LS at all, VWRL is fully diversified, adding LS just doubles up your risk as they are highly correlated. ( at least the ones with >60% equity are) To diversify properly you need to add assets with ideally negative correlation to equities, so PMs, Commodities, long duration bonds, and maybe REITS. GLTA.

[@denizpaull]

I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $300,000. ' John Steven Barr' is among the most accomplished portfolio managers in the industry, widely acknowledged for his outstanding work. I highly recommend taking a closer look at his impressive portfolio.

[@RealStAndrews]

Great to hear your thoughts Pete

[@jawadsaleemi]

Can vanguard sipp be used for commercial property purchase?

[@MeaningfulMoney]

Not to my knowledge. It isn’t a full SIPP but a sort of SIPP-Lite where you can hold their ETFs but not property. Look at Dentons Pensions and AJ Bell for decent options for commercial property. Do your own research though.

[@craigross341]

Hargreaves is costing me a lot more for the SIPP than the ISA, but then SIPPs are just more expensive than ISAs.

[@stevetop5970]

HL cost a lot more for everything!

[@craigross341]

@@stevetop5970 Not if you only hold investment trusts and etfs in the ISA or Investment account. Capped at £45 a year. Holding unit trusts is lunacy, though.

[@stevetop5970]

@@craigross341 Yes the bigger your pot, the more they take, interactive charges about £120 per year, big difference.

[@edcooper1422]

Hi - Great Video - I have left it a bit late but im going to start a pension before April. Im not sure if I understand the point about the Target Retirement Funds - If I go for the Life Strategy 80 with about 20 years in mind- would I still be looking to manually reduce risk as my forecast retirement age approaches. I am an artist and art teacher and love what I do - so aside from illness/accidents etc Im not sure I would ever completely retire so also im not sure how that affects my choices!?

[@MeaningfulMoney]

Hi Ed. The point is that it is important to be intentional about de-risking, rather than have a target retirement fund do it for you. Whether or not you should do it, depends on what you will likely do with your pension fund. If you don’t know yet, (and I’d be surprised if you do), then don’t worry any more about it until you’re a few years away. Chances are, as you’ll probably continue to work and earn money to some degree, that you’ll enter drawdown, but a lot can change between now and then, so don’t stress about it now. Stay tuned to the main podcast season, both the current one and the next, for more on this exact subject.

[@edcooper1422]

@@MeaningfulMoney thanks for the reply. I'll keep posted. My aim is long term and if I'm still earning I would.leave it a long as possible before taking out of the pot. With corona virus in the news should I be worried about paying into a higher risk fund?

[@MeaningfulMoney]

@@edcooper1422 The fact that you're worried about that means one of two things: Either you're not wired to take risk, and will therefore need to learn to be comfortable with lower returns, but better sleep(!) Or, it means that you haven't really grasped this fact: risk is inherent in investing, and you can forget about Coronavirus or any other risks that emerge, because you know they are part and parcel of making money grow. In fact, smart investors are rejoicing right now and looking for as much money as they can find to add money IN, seeing as how stocks are on sale... Tread carefully, Ed. Continue learning and dip your toe in when you're ready...

[@phil1edinburgh]

Once you get a large sipp you should switch to interactive as it is cheaper even just having Vanguard and you actually invest in accumulation ETFs like VWRP which Vanguard refuse to sell to its own Uk customers.

[@marcusnelson1239]

Do you complete a w-8BEN form? Or do you know if it is not required? I am unable to find information on this anywhere.

[@misfit2022]

The only problem I see is getting your company to pay in as most just want everyone to pay into the same pension to keep admin faff down because if they do it for one etc etc and I don’t see the benefit of investing post tax cash as may as well use an ISA.

[@MeaningfulMoney]

You’re right, most companies want to pay into just one scheme. But if you pay into a pension from taxed income, you get the tax back, essentially, through tax relief.

[@misfit2022]

MeaningfulMoney True but only puts the investor in a neutral position which I think makes the Vanguard stocks and shares ISA a slightly better option, possibly . I say possibly as you are a professional and I am a muppet on the internet :). Thanks for taking the time

[@sid35gb]

With work place pension the you put in 5% before tax and your company has to put in 3% as well. You can transfer your work place pension pot to your Sipp at any time.

[@misfit2022]

David C Thanks

[@tlangdon12]

You are right, but there is nothing to stop you moving your money from your works pension to the Vanguard SIPP (or any other SIPP) if you ever leave the job. For people who expect to change jobs regularly, this could be an ideal setup.

[@Nedsch87923]

Great video

[@MultiOutdoorman]

Reducing fees is a main concern i reckon ...

[@MeaningfulMoney]

Hugely important…

[@radiantheartyoga7269]

Transferring my pension to interactive brokers

[@MeaningfulMoney]

Good shout - Interactive Investor is a very popular platform.

[@jayaveld124]

excellant information. thank you.

[@sandokai1]

Another Subscriber :-)

[@Rhino11111111]

Can I merge my old pension funds into this?

[@MeaningfulMoney]

You can, but tread carefully. This isn’t advice, so make sure you learn a bit more about pensions consolidation before taking the plunge

[@ndog666gaming]

Cheers Pete :)

[@oliverdesvaux]

Hi there - great channel! You've got a new subscriber! :) Question I have is whether it is possible to move a current collective retirement account I have with a different company across to this Vanguard SIPP? is that a 'done' thing - transferring all retirement funds into SIPPs?

[@PeteMatthew]

HI Oliver - yes, absolutely. You can transfer money from one pension to another no problem. The process is that you open a SIPP with Vanguard (or whoever) and then ask them to request the money from your old scheme. I've no idea whether this is a good idea for your specific circumstances, but it is done, and often.

[@oliverdesvaux]

Thanks so much- you’ve given me the confidence to take the plunge on this now! :)

[@freetrade2financialfreedom407]

Enjoyed the video ! Subscribed.

[@connormcleod9595]

Got it. S&p 500

[@stuartrobertson2890]

Hi Pete, stumbled on your channel and really like your no nonsense content, I'm considering the Vanguard SIPP to consolidate 2 of my previous workplace pensions (Scottish Widows and L&G), i also contribute (10% salary sacrifice and 40% earner) to my current Company workplace pension. Is now a good time to be transferring pensions?

[@MeaningfulMoney]

Hi Stuart. If I had a quid for every time I get asked “Is now a good time…?” 🤣 Think through the mechanics. Markets are volatile right now, and if you transfer then you’ll be out of the market for a few days, maybe a couple of weeks. That could go for or against you; it’s the toss of a coin. But ask yourself if, in the context of the multiple decades of investing, it’ll make much difference? I’d suggest probably not, but you must do whatever you feel comfortable doing. I can’t advise you on here unfortunately! Good luck…

[@stuartrobertson2890]

@@MeaningfulMoney Thanks Pete, i'm thinking with my pension funds dropping at the moment that everybody's else's will be also so if i transfer now, the new fund will be lower also so it shouldn't make that much difference, Thanks for the feedback though, Great Channel by the way!

[@dominic8218]

Would steer clear of Aviva! They charge you more if you take non advice and are very restrictive in the way you can take drawdown. They pretty much force you down taking advice and all the lovely costs that involves. Disgusting.

[@msarros1]

Athlete comparisons for FAs someone is reading his nick murrays books:)))

[@user-wr4yl7tx3w]

why does Vanguard restrict only to residents and non-US citizens?

[@MeaningfulMoney]

Not necessarily Vanguard’s rules. You can’t open a pension or ISA unless you’re UK resident. The anti-money laundering regulations are so tight it makes it difficult to complete the requirements from a distance. And finally, the US’s FATCA rules are so invasive, that for most platforms, it’s easier to exclude US citizens than it is to comply.

[@jonjones8029]

Please help me pass my CeMAP lol

[@pnkrckmom]

Asics FTW.

[@markfindlay8636]

I did run faster with new trainers. Only because l did my homework first.

[@MeaningfulMoney]

Lol! I did too!

[@colummccrudden101]

I got new trainers I outran them,,,,,,,