Vanguard SIPP Preview - A Game Changer

We finally have details on the Vanguard SIPP which will launch early next year. It has been a long time coming, but if it launches on time, and Vanguard says it's very confident that it will, it will set a new standard for low-cost self-invested pensions with few hidden costs, a low platform fee and simplicity. We interview Andrew Marker, Head of Retail Pensions from Vanguard UK and Mark Polson of the Lang Cat to hear what they have to say about the new offering.
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#PensionCraft #Vanguard #SIPP

[@Sabhail_ar_Alba]

I just transferred an actively managed pension fund of £48k with annual charges of £1.6k into a Vanguard pension fund. This fund had grown by 8% in 6 years so I don't believe for one minute actively managed funds performed better once charges and the effect of compounding are considered.

[@daveschmarder-1950]

Here in the US, I've been a Vanguard customer since the mid 90's. It was my best investing choice. I have 3 different accounts, all with brokerage services. Even with free ETF trading, my portfolio doesn't turn over much. I'm chuffed with the services they provide.

[@Pensioncraft]

Thank you for taking the time to comment and for sharing your experience of Vanguard. Ramin

[@freetrade2financialfreedom407]

I think there is finally a massive awakening to the benefits of long term investing here in the UK. Especially with young people 👍🏼

[@rah4254]

So happy Vanguard decided to come to the UK tbh

[@Pensioncraft]

Thanks Rah, me too. Ramin

[@farnyone]

Hi thanks for the great vids you put out, I’ve only come across you as I’ve been doing some homework on sips as I’m looking to start one very soon. I’m very new to all this so you’ve been a big help 👍

[@jbullionaire2749]

I was looking into sipps earlier this year and aj bell came out on top. I didn't go for it however as there were just so many little charges and complexity. This vanguard sipp looks ideal!

[@jbullionaire2749]

@@TechAngelx Thanks for that. I'd rather go with the big name of vanguard though to be honest

[@YouPube_X]

@@TechAngelx can’t you transfer your SIPP to another provider?

[@freetrade2financialfreedom407]

Another very informative video. I’ve learnt so much from your videos. Everything is always explained so well. Thank you for all your efforts. 😊

[@Pensioncraft]

Hi Freetrade 2 Financial Freedom, Thank you for your support! Ramin

[@AjitB07]

Would you consider doing a video on salary sacrifice? pros/cons and calculations etc

[@AjitB07]

Hiya, I have a bit of a dilemma. I just opened a vanguard account and I decided to go with just equity for now and drip feed(waiting for a correction etc before I dump money into it). I only have developed world ex UK index fund with an OCF 0.14% at the moment. looking at your branch method I was then going to also get the FTSE 250 ETF with an OCF of 0.10%. I noticed UK all share index was 0.06% OCF, would you get all share over FTSE 250 because of the OCF, or just stick with 250 due to the exposure? Or would you just get a lifestratergyfund instead at 0.22% lol. Any input is most welcome. Thanks

[@Moocow9991703]

By far the best vanguard pension review, thank you.

[@Pensioncraft]

Hi Daniel, thank you, Ramin.

[@guycocker]

Great video, thanks.

[@hammersteve]

Marvellous content. Thank you.

[@Pensioncraft]

Thank you Steve Hume! I'm pleased you liked it. Ramin

[@perpetualdividends6719]

Great news! Canada also has some of the highest mutual funds fees in the world. Good thing I found Vangurad at the start of my investing career!

[@Pensioncraft]

That's awesome Money Games! Thanks, Ramin.

[@swathysrinath3573]

Hi Ramin, first of all thanks a ton for these informative videos you put out for the public. Its such a huge blessing for all new investors who hardly have any idea like myself. I am an NHS employee 32 years old I have been contributing to NHS pensions since I began my career 7 years ago. I want to continue my NHS pension, but alongside can I also have this SIPP ? or am I not allowed to get into SIPP whilst I already having NHS pension in place. Please do reply whenever you can, would be massive help . Regards

[@Pensioncraft]

Hi swathy srinath, there's no reason why you can't have a SIPP alongside your existing pension. You may find my "SIPP vs ISA" video helpful kzbin.info/www/bejne/l4rLeJ2brLuSgqM Thanks, Ramin.

[@swathysrinath3573]

@@Pensioncraft Thank you so much for your reply. Will look into this in detail. Regards

[@docjc100]

now it's 11th of February, by my account it's already 'early 2020' still no sign if the vanguard SIPP. ;(

[@ElyRiverBlues]

Yes as Ramin says $5 a month for his Patreon subscription is very little for a lot more than these excellent videos he puts out! I've been investing for a long time but have learned a lot.

[@Pensioncraft]

Hi ElyRiverBlues thank you! Ramin.

[@conorm2524]

Will we be able to have Stocks & Shares ISA as well as a SIPP with Vanguard simultaneously and will they have the same tax breaks together? Thanks.

[@pascaljoly5752]

Can you take your lump sum at 55 in chunks or does it have to be a one off? If you can, is the total 25% based on what the value of your pot was on the day you turned 55? Thanks

[@battj1]

Quick question, with a Vanguard SIPP, can you mix fund options, e.g. 50% in one fund and 50% in another fund? I can do this with Scottish Life and Royal London, just wondered if it was possible with Vanguard.

[@stephenpalmer528]

Hi,can you hold a SIPP in different providers like ISA's but only contribute to one in a tax year?

[@TheGamingTank]

I'm very new to investing so excuse the silly question but isn't it better to invest in a good fund directly rather than through a SIPP to bypass the monthly deposit limit? What's the perk of using a SIPP?

[@Captain-Paul]

I would suggest it would be better defined as a PPP not a SIPP generally as you can only choose Vanguard funds in which case are the cost comparisons with all those other companies with much wider investment choice and access to outside fund managers valid at all?

[@tc9634]

Fair point because it's obviously not a fund supermarket but then it's not trying to be that. Vanguard serves its customers not its fund managers.

[@merkavah4]

One issue, they won't credit the tax relief for 6-11 weeks after making a deposit. I know some providers credit it instantly or in my case with Close Bros a few days later.

[@lizziebett3654]

This delay could be significant.

[@seandangercampbell]

I have a question regarding the Vanguard SIPP: is there any undesirable consequence to changing the amount you contribute on a regular basis?

[@gringadoor5385]

Any news on when it will be made available? Thanks.

[@gerry2345]

I like this vid..Good insight

[@Pensioncraft]

Hi GerrysPlace thank you. Ramin.

[@IncomeBoost42]

6 months ago, I moved my isa from Halifax to vanguard because I worked out the management fees were higher for the same products. The account fees being shared across isa and sipp is nice. Is that also shared across a general account ?

[@tc9634]

Yep. So if you'll have more than £250k across a general, ISA and SIPP account the total vanguard will take will be £375pa

[@nickfifield1]

Please can you compare with interactive investors Sipp - which I’m using , and understand cheaper.

[@GH-he5wf]

Hi I'm self employed and I wanted to know if I opened a SIPP now (2020-21 tax year), can I claim back tax relief from this when filing my tax accounts for 2019-2020? Thanks so much! :D

[@johnhaug1747]

Suggest retirement portfolio be designed to generate more dividends than current cost of living amounts. EG, if median annual cost of living is 23000 pounds sterling, then design portfolio to do 50000* pounds sterling. Go ahead and use the 23000 pounds sterling annually, and recycle the difference to buy more portfolio stock(s). This should more than offset inflation, which the Fed targets ~ 2-3% under normal circumstances, and allow for greater inflation adjusted future distributions. *50000 is just a guess for illustration purposes, end users will have to iterate their own specific value to match their comfort zone(s).

[@sombhoog3996]

Thanks Ramin. Great video! Do I have to pay in £100/month if I open a SIPP with Vanguard? Or, I can just deposit as I please once I have opened the account with a lump-sum £500? Thank you.

[@hannahkris6929]

A very good video. Thank you, within Vanguard ISA - with the S&P 500 UCITS ETF (VUSA) fund, if it is held within stocks ISA. are UK nationals/tax resident pay any US tax on this although in UK it is tax free, because S&P 500 has US stocks? or are ISA products tax free.

[@Pensioncraft]

I am glad you found it helpful

[@clark5551]

With the vanguard sipp will I be able to pay contributions from my gross wage by getting my employer to pay direct, or will I have to pay in from my net wage and let vanguard claim the tax relief? Thanks

[@alvisinger112]

That’s down to your employer

[@mikem6466]

The only thing Vanguard are missing is an app!

[@jamesjoseph1572]

And a LISA!

[@Chillednfunked]

Don’t need an app - their website is great and it’s optimised for mobile phones.

[@mikem6466]

@@Chillednfunked not as convenient as an app though is it..

[@pw3591]

Looks great for the individual investor, any idea if it will fully meet the requirements for auto enrollment for a larger company scheme ?

[@Pensioncraft]

Hi Phil, I asked Vanguard support and they said "We will only be offering personal pensions (SIPP) and have no plan to move into workplace pensions in the future." Thanks, Ramin.

[@pw3591]

@@Pensioncraft Thanks Ramin. 👍👍👍

[@petewanderer672]

I asked Vanguard this question and didn’t really get an answer. If you transfer in a sum of over 85k, what happens if there is some sort of banking calamity during the ridiculous amount of time these transfers can take. Are you protected? Would it be better to buy Vanguard funds with your existing provider and then initiate the transfer, so you are not transferring cash. Finally, do you think it’s wise to have all your investments with one provider, even Vanguard.

[@jskeeble36]

As the Vanguard SIPP can only hold Vanguard funds I plan to hold only such funds ahead of transfer on the assumption that the transfer will be in specie. Will need to check with Vanguard first though. Shouldn’t be a problem as specie transfers are normal practice.

[@Pensioncraft]

Hi Pete, I think that the risk from markets is much greater than the risk of Vanguard going into bankruptcy. But a banking calamity may not lead to a calamity with Vanguard, and you would remain the owner of the assets. If your money was being transferred as cash you could even fare better than if you'd held equity (which I'd assume would fall in a severe banking crisis). Sometimes it costs more to transfer funds rather than cash and it can take longer, it's best to ask your platform provider. If Vanguard did go bankrupt client money rules ensure that the claim on your assets would be minimal as it would be required to pay off Vanguard's debts which weren't covered by selling its assets. So I wouldn't worry too much about this, but the risk of Vanguard going bankrupt isn't zero. Thanks, Ramin.

[@marklawrence2647]

Do you have to be a UK resident to have a SIPP ?

[@jskeeble36]

Unless I missed it there is as yet no indication of fees when in drawdown. That said, given Vanguard’s track record they are likely to be competitive. I plan to move my iWeb SIPP to Vanguard not to save money but to provide the diversity of a second platform.

[@tc9634]

I think the fees should be the same... I wouldn't see why they wouldn't be.

[@jskeeble36]

@@tc9634 I just checked Vanguards website. It says no additional charge for drawdown. Comparing this with iWeb charges there is a slight premium of £15 for the Vanguard product. I’ll definitely make the transfer as the rest of my portfolio is on iWeb and I want the safety of a second platform. I assume I’ll need to hold all of my SIPP investments in Vanguard funds ahead of the transfer.

[@goldbrick2751]

Hello I just discovered your channel. Can you comment if I can move my existing NHS pension to sipp in UK?

[@Pensioncraft]

Hi Gold Brick I suggest you take a look at this guide: www.nhsbsa.nhs.uk/sites/default/files/2018-11/Leaving%20Early%20and%20Transferring%20Out%20Guide%20%28V16%29%20-%2011.2018.pdf Thanks, Ramin.

[@nickhall7894]

I have an old private pension pot that I no longer contribute to. Would I be able to port that across without adding to it further to benefit from the lower fees? I’m contributing elsewhere to a workplace pension.

[@tc9634]

Yes but ask the provider of that pension pot in the first instance if you can do this, how you can do this, and how much it will cost.

[@Pensioncraft]

Hi Nick, pension transfers are controversial because you may be losing benefits when you move. For example, a defined benefit pension is something that you would not give up easily. Some good points to consider before transferring are made here www.moneyadviceservice.org.uk/en/articles/transferring-defined-contribution-pensions Thanks, Ramin.

[@nickhall7894]

Thank you Ramin. My pension was a private one I took out 25 years ago which was not related to employment. It has a TER of 1.16% and I’m frustrated with Scottish Widows as I have no online visibility of it. I will double-check any transfer fees when the Vanguard SIPP is launched. Thanks again!

[@phillipgregory3810]

Hi. Can you suggest the best funds/etfs to use in the SIPP

[@Pensioncraft]

Hi Phillip this may be helpful: "Investing Strategies For Beginners to Advanced" kzbin.info/www/bejne/f4qbZ4OJZ9SqbZY Thanks, Ramin

[@daddo1600]

I pay my max matched pension contribution at my work (9%) and also invest in an ETF via Vanguard stocks and Shares ISA. I earn 90k+ a year and this could be over 100k based on bonuses. What is the benefit of locking up money until I'm 55? What benefits per year so I get from tax relief?

[@YouPube_X]

You earn that much and cant figure it out for yourself?

[@user-hc1ys2bs6p]

Can I invest in vanguard from Greece.???? How I open an account🙂

[@person.X.]

Why do Vanguard not offer this option in Australia? We are being absolutely shafted down here on our pension savings.

[@Pensioncraft]

Hi person X SIPPs are UK specific, but it looks like Vanguard offers a platform in Australia too www.vanguardinvestments.com.au/retail/ret/invest-with-us/faqs.jsp Given the size of the Australian market it's probably just a matter of time until the offer a similar pension product there too. You should get in touch with them and ask, I'd love to know what they say. Thanks, Ramin.

[@eezy251able]

Great video. I'm 35 years old and I'm currently investing into the lifestrategy 80% equity fund. Do you think this would be a better investment than opening up a SIPP if I wanted to draw money out in 20 years time when I'm 55? What's your thoughts on this as I'm in a dilemma? Thank you.

[@tc9634]

The actual decision you have to make here is whether you want to be able access your money whenever you want, or if you're prepared to lock it away until at least age 57 in return for getting an extra 25% bonus (or "tax relief"). If you are going to invest in a sipp just make sure you're happy to lock that away until retirement.

[@lizziebett3654]

Good points!👍

[@eezy251able]

Thanks for replying. I understand I'm able to take out a lump sum out (25% tax free) at 55. However with a lifestrategy fund isn't this tax free any how as its invested into an ISA, or am I being dumb here?? 🤔

[@BoxerfanUK]

Tyson Spiller if you have an ISA investing in LS funds then of course all of your investment is tax free and you can draw out whatever and whenever u want. If you invest in a LS SIPP then u cannot draw until age 55 at the moment eventually going up to 57. When u decide to draw down any of that SIPP then yes 25% tax free and rest is taxable if drawing over you annual personal tax allowance, BUT... monies put in a SIPP gain tax relief @ 20 or 40% depending on your earnings so a SIPP is a total no brainer IMHO

[@eezy251able]

Thank you for your reply you've explained it really well. So, if I invest into a SIPP that I set up and pay myself, how do I claim tax relief?..

[@tomstopper5281]

Would you advise a good independent financial adviser?

[@alexk3948]

Fidelity cap their SIPP charges at a more reasonable £45 pa (and £10 per adhoc trade) if holding ETFs/ITs rather than OEIC funds. Works out cheaper than even the fixed fee platforms for larger account values.

[@vengefulavenger1510]

Probably a gimmick. Vanguard are the only non-profit platform.

[@alexk3948]

​@@vengefulavenger1510 Fidelity have been offering the £45 capped SIPP for many years. They make a bit of money from the £10 trade fees but for a large account such as a pension it's a lot cheaper than Vanguard's £375 cap. Similar how Halifax's iWeb work out cheaper than Vanguard for a larger S&S ISA. Vanguard are a better platform for smaller account values.

[@duffgaryduff]

Same with Interactive Investor. £100 per year fixed. Better than Vanguard and gives you the option to buy companies and funds other than Vanguard....

[@alexk3948]

​@@duffgaryduff II's £100 pa fixed is plus VAT (£20) and plus their £10 per month II account fee (of which you get £8 in trade credits) so at least £240 pa.

[@hTyKn1]

@@alexk3948 Fidelity charge 0.35% compared to Vanguard's 0.15% for a SIPP.

[@simonmorse2091]

Can I transfer my private pension into this product, I am a Vanguard account holder.Will my pension provider charge me for this transfer?

[@tc9634]

Yes You'll have to ask your current Pension provider about transferring to vanguard and any costs

[@tomstopper5281]

Is is still worth starting a SIPP at 54 considering I will retire in 2035?

[@aidanmcgale533]

Can I buy gold in vangard

[@Jack__Reaper]

Should we be in VUSA or VVAL?

[@alexk3948]

Unless you have market knowledge to know that US or Value stocks are going to be favoured in the next stage of the market cycle then I would stick to World or All World such as VEVE or VWRL for equities exposure.

[@Pensioncraft]

Hi Jack, that depends on your view as Alex says. And if you don't have a view then the "neutral" position is simply to have a globally diversified position proportional to market capitalisation. Thanks, Ramin.

[@Jack__Reaper]

@@Pensioncraft but doesn't the S&P return an average of 9% over the long hall as opposed to just investing in value. Which is a tough game to play

[@learnsomethingneweveryday1539]

Why does it seem like the UK stock market overall has performed poorly over last 12 years compared to US

[@Pensioncraft]

Hi Ahmet, buybacks are certainly partly responsible for the strong US performance over the last decade. I discuss this in my video on value vs growth investing kzbin.info/www/bejne/o4fIYqJ9r7CjgNk Thanks, Ramin.

[@coolmonkey619]

So sipp is better than investment ISA if your willing to lock your cash away until 55

[@Pensioncraft]

Hi tom111 this video will help "SIPP vs ISA Which Is Best?" kzbin.info/www/bejne/l4rLeJ2brLuSgqM Thanks, Ramin.

[@fashionmixtapes]

it will be 57 from 2028

[@hTyKn1]

Fidelity will lose 3 accounts from our household as soon as Vanguard's SIPP goes live :)

[@Pensioncraft]

Thanks gemini, I think a quite a lot of people may be moving to Vanguard. Ramin

[@hTyKn1]

@@Pensioncraft Have you made a video on the effects that currency fluctuations can have on a UK based investment in a foreign country? A lot of funds don't seem to be hedged against currency?

[@Pensioncraft]

Hi @@hTyKn1 I talked about currency exposure in my video on how to invest during Brexit pensioncraft.com/how-to-invest-during-brexit/ Thanks, Ramin.

[@hTyKn1]

@@Pensioncraft Thanks I'll check it out

[@gileschalk212]

Can I pay into this through my ltd company?

[@dudleyjoseph9485]

I would have thought so. I currently do this into a different SIPP and may wish to start putting some money into Vanguard. I went down the route of employer contributions (rather than employee contributions via salary sacrifice as poster below stated). Employer contributions are classed as a deductible expense for corporation tax purposes.

[@Pensioncraft]

Hi Giles I asked Vanguard support about this and they said "We can accept contributions from a Limited Company where they are a director of their company. Contributions can be made by a company debit card registered in their name." Thanks, Ramin.

[@gileschalk212]

PensionCraft many thanks for the information 👍

[@rf9562]

I have been living in UK for 8 years now. Originally I am from Hungary. What if I open a Vanguard SIPP , but after 10 years I decide to move back to my country? Am I going to able to take out the money or shall I keep it inside until I turn 55 ? I have also have a Vanguard ISA account , what about that one ? Thanks a lot, great video as ever

[@tc9634]

Hi This is a very specific issue. If you call HMRC they can hopefully help with this or direct you to someone who can.

[@rf9562]

@@tc9634 Thanks for the reply, I am still enjoy being here , but never know what future bring :)

[@tc9634]

@@rf9562 yeah sorry about Brexit 😅 please stay 🙏

[@rf9562]

@@tc9634 Its not Brexit, actually I live in London and it has changed a lot since I am here.At this point I am not even sure Brexit will happen.

[@1RAGEACE]

Róbert Fenyvesi well how you know lol

[@laobanmo]

Vanguard has one huge drawback: They do not allow people with tax residence outside the uk to have an account, even if this is in addition to uk tax residence. Thus they automatically turn away all expatriates or anyone who happens to spend enough time abroad to pick up a tax residency elsewhere. This is absolutely just bureaucratic stubbornness on Vanguard's part, since there is no legal requirement to exclude tax residents of other countries, so long as it is properly declared. In this respect Vanguard's service is lacking, putting its own convenience before the interests of a large number of its potential customers.

[@dr.yasirkhan7935]

1st comment yayyyy