SIPP: Money Market Funds - Home For Short Term Cash?

Bravepants

tigerspill said:

Bravepants said:

tigerspill said:

For those using the Investecc Minerva, how do you go about setting this up?  Can any individual do this or does it need to be part of a company/employee scheme?
I struggled tp find out what "cash" products they offer in their SIPP.  Is there a link to these.  I have read people on here with the two year fixed at 1.95% option, but not sure if this is available.
Also, for something like this do we need the full or lite SIPP - there is a big difference in charges.
Any help with this would be gratefully received.  Thanks

Yes, you can set up an InvestAcc Minerva SIPP yourself. InvestAcc will be the trustees of the SIPP, but you will have to find out from them who they currently partner with to provide the cash deposit accounts. I applied for the IvestAcc SIPP and then had to complete another form applying for the deposit account, stating that InvestAcc were the trustees. My SIPP cash is held in a 2 year fixed Investec (not InvestAcc!) deposit account at 1.95%.

The SIPP Lite allows only a single product (deposit account or investment fund), but the Full SIPP allows more than one hence the different charges. If you only need the one deposit account then stick with the SIPP Lite.

Thank you for the detail.
Approximately how long did this process take?
Also, with the SIPP Lite, and having a single deposit account - I assume you cant add to this later as the Investecc product is likely a single contribution fund fixed for two years from that date?
I want to make three contributions - one for this and one for each of the next two tax years.  I assume each would be treated as a separate products, and hence would need the Full SIPP.

I can't remember how long it took. A few weeks perhaps. I transferred in from another provider. If you wanted a 3 year fixed deposit account for your first contribution you would have to have multiple accounts yes, therefore the Full SIPP. Otherwise find a 1-year deposit and when that matures (next year) add your second year's contribution and start another 1-year fixed. You would have to work out which would provide the better return (interest vs fees):

1. A Full SIPP with a 3 year fixed (this year) plus a 2 year fixed (next year) plus a 1 year fixed (the year after)

2. A SIPP Lite with sequential 1-year fixed accounts

DairyQueen

Thanks for the replies. Good point about the platform charge kicking-in on non-cash. Overlooked that. That will cut the rate by 0.25% on one SIPP and 0.1% on the other. Plus, that measly guaranteed 0.1% on cash holdings will be foregone.

I had considered transferring but that would require liquidating the other assets (the major allocation) as I doubt that a partial transfer to, say, Halifax would be allowed. Especially on the crystallised SIPP account. Halifax also suggest that it would take 6-8 weeks to transfer. Quelle horreur!

The fees on the full Investacc Account can't be justified for the cash amounts in question but the 'Lite' product would be possible. However, given that the interest rates they offer are apparently not available to review until after the transfer, I have ruled that out.

I think I will take a closer look at the Money Market funds and perhaps invest just the cash required for drawdown on the higher value SIPPi in years 3 and 4 . We have sufficient unwrapped cash if the investment goes belly-up.

For the benefit of others I am looking at two funds in particular: Royal London Short-Term Money Market (OCF 0.1%) and Fidelity Cash (OCF 0.15%). The former has returned between 0.2% and 0.7% annually over the last 5 years and the latter between 0.1% and 0.7%. Maybe worth a punt for the SIPP carrying the marginal 0.1% charge.

cloud_dog

Have you considered an ETF, for example Lyxor Smart Cash - UCITS ETF C-GBP?

Obviously returns are not great but every little helps.

MK62

You mentioned that one SIPP has already been crystallised - do you have the option to crystallise (or part crystallise) the other?
If so, you may be able to get the cash out of the SIPP using a tax free lump sum - then you'd have access to retail interest rates, either in our outside an ISA (not that they are particularly great at the moment, but 1.8% is available on a 2 year fix).
Of course, your tax positions might have a bearing too.......

peterg1965

tigerspill said:

For those using the Investecc Minerva, how do you go about setting this up?  Can any individual do this or does it need to be part of a company/employee scheme?
I struggled tp find out what "cash" products they offer in their SIPP.  Is there a link to these.  I have read people on here with the two year fixed at 1.95% option, but not sure if this is available.
Also, for something like this do we need the full or lite SIPP - there is a big difference in charges.
Any help with this would be gratefully received.  Thanks

I opened a Minerva SIPP as an individual, directly with InvestAcc, no requirement to go through a Financial Advisor.  It was effortless and simple, I transferred (free) a cash holding from my previous HL SIPP.  Cost is a flat £400+VAT per year for me.  They offer access to most, if not all, of the SIPP deposit products on the market, and I use https://www.!!!!!!.uk/accounts-for-pensions/  to search the market for the best fixed rate products.  Currently the best  two year fix is 1.75%with United Trust Bank.  I also get 0.55% on any holdings in my SIPP deposit account.  I tend to wait until I have £10k in that account before transferring to a higher rate fixed term bond.

Hope that helps.

Albermarle

According to the website you can hold OEICS etc via any platform in the Minerva SIPP . How does that work in practice ?
Do you have to still pay a fee to the platform you buy the investment from ?

fred246

I had a FSAVC in the early 1990s. I rememeber my IFA telling me it would be a good idea to put some of my money into money market funds. Without the internet I didn't know what she was talking about but she was the financial expert. I had 30 to 40 years before retirement. In those days the IFAs took a large proportion of your payments as commission. I couldn't believe it when I took over the running of the pension myself.

DairyQueen

MK62 said:

You mentioned that one SIPP has already been crystallised - do you have the option to crystallise (or part crystallise) the other?
If so, you may be able to get the cash out of the SIPP using a tax free lump sum - then you'd have access to retail interest rates, either in our outside an ISA (not that they are particularly great at the moment, but 1.8% is available on a 2 year fix).
Of course, your tax positions might have a bearing too.......

Thanks for mentioning. It's a good point. Our tax position is such that annual UFPLS is the tax efficient way to drawdown from my SIPP so I don't wish to crystallise up-front.

The proceeds from OH's crystallisation form part of our spending plans for the next few years and are now invested at retail rates. The drawdown from his SIPP is a balance between taking the max possible in addition to his other taxable income without incurring HRT, and the minimum he must take to avoid any risk of an LTA breach. It's difficult to assess how much this will be year-on-year but I have calculated it will be a total of around £15k-£20k up to 2025. It may be more so I have added another £10k for contingency.

First world problem I know. We are fortunate. It may seem crazy to seek the best returns on the SIPP-wrapped cash given our situation but it's in my nature to try and max interest, especially given that returns on cash are so poor.

Having said that, there is a balance between the benefit of more interest and the extra complexity involved in accessing it. Transferring/part-transferring to a different platform just to max the interest is a step too far given that, for example, assets may have to be liquidated during the process and/or an additional SIPP will add complexity to the management. As we consolidated OH's pensions last year to facilitate management this would be a retrograde step. If either of the SIPPs were wholly/majority cash then a transfer would be worth it but this isn't the case.

I am still of the opinion that the money market fund could be a good option. I considered a short-term bond fund but in the current climate, for me, that is too risky an alternative to cash. 

Will post back on the option I decide to take in case anyone is interested.

Bravepants

DQ: I would be interested. I'm wondering what to do when my SIPP deposit account matures next Feb.

Bravepants

Interesting article on Money Market Funds...might be better in the Halifax!:

https://www.morningstar.co.uk/uk/news/195535/should-you-park-cash-in-a-money-market-fund.aspx