Vanguard pension vs HL pension vs Others

Mistermeaner

Received an email today from Vanguard stating that their pension has now launched (yey)
I am sure others will have this question so apologies if duplication but if someone was to invest solely in vanguard life strategy products what is the most economical way to hold them in a SIPP; would it be with vanguard direct or HL (with discount) or something else
Does this vary with value?

fronty

I think I would start by looking at the platform charges then the ongoing fund management charges and whether the platform provides any discount. Also I believe Vanguard may only offer their own funds, so if you wanted to invest in non-Vanguard funds you might come unstuck. I am not sure of their charges, I went with an II SIPP in the end because I wanted to hold other funds not just VLS, also this was before they had launched their SIPP anyway.

El_Torro

It also depends on how big your pension pot is. Vanguard charges 0.15% of your pot annually, which is competitive when compared to competitors who also charge a percentage. There are other platforms that charge a fixed rate though, which can be advantageous if you have a large SIPP. 

As with most things price isn't everything though.

waveydavey48

Can anyone say what the "other charges" on top of Vanguard's 0.15% would equate to? My DC pot is with fidelity and they are changing the scheme to accommodate drawdown (as few people buy annuities these days) and the total expense ratio is about 0.33%. My pot is about £170k.  I would just plump for VLS 60/40 if I move to Vanguard SIPP but would the "extra charges" mean the total expense ratio would be about 0.33% anyway?
I appreciate performance is important too, probably more so, but I've no way of knowing how the two would compare going forward.  

Albermarle

With Fidelity if you are invested in funds, the platform charge is 0.35% , whether you are in drawdown or not. ( HL is 0.45%) The Vanguard platform fee is 0.15% but so far drawdown is not available . 
Fidelity and most other SIPPs, offer a very large range of possible investments and depending on exactly what you invest in and how large your pot is , the platform fee can be reduced.
The charges of the funds are always on top of the platform charges on  all platforms . VLS funds cost the same whichever platform you are with . 
So for example holding VLS 60 in a Vanguard SIPP would cost platform fee 0.15% + fund fee 0.22% = 0.37%

thickasabrick

One of the regulars on here SnowMan has created a spreadsheet which is quite useful for getting an indication of platform charges.

Plugging the figures into the spreadsheet gives:

For you with £170k funds 1 holding 12 purchases per annum it estimates fidelity at £595 and Vanguard at £255

For me with £260k fund 1 holding (Vanguard LifeStrategy 60) 12 purchases per annum Vanguard is  £375. My current platform is Aviva costing just over £800 p/a.

I've been looking forward to the Vanguard SIPP offering but at the moment there is no information on drawdown.

Makes it difficult for me to transfer to them as I will be starting flex drawdown in 2 years time.

Although £400 per annum saving is not to be sniffed at

SnowMan said:

anyone wanting to download the new version 35 now because of this news (it includes the Vanguard SIPP) the link is

https://drive.google.com/open?id=1wacGNlqMm2ehFSDY02NLLZ_ccBa6JdU2  

waveydavey48 said:

Can anyone say what the "other charges" on top of Vanguard's 0.15% would equate to? My DC pot is with fidelity and they are changing the scheme to accommodate drawdown (as few people buy annuities these days) and the total expense ratio is about 0.33%. My pot is about £170k.  I would just plump for VLS 60/40 if I move to Vanguard SIPP but would the "extra charges" mean the total expense ratio would be about 0.33% anyway?
I appreciate performance is important too, probably more so, but I've no way of knowing how the two would compare going forward.  

Albermarle

For you with £170k funds 1 holding 12 purchases per annum it estimates fidelity at £595 and Vanguard at £255

For me with £260k fund 1 holding (Vanguard LifeStrategy 60) 12 purchases per annum Vanguard is  £375. My current platform is Aviva costing just over £800 p/a.

Due to discounts for holdings above £250K , for a £260K fund holding , Fidelity would cost you £520. So less of a difference than the smaller holding and full drawdown flexibility at no extra cost. 

waveydavey48

Thanks folks. I'm in the "Direct Line Group Personal Pension". The total expense ratios for the 3 funds are 0.31%, 0.362% and 0.364.% In other words apparently cheaper than holding VLS60 in Vanguard's SIPP if that is 0.37%. I think drawdown is free with the scheme I'm in and I'm happy with the performance over the last 6 years so it seems sensible just to stay put. 

waveydavey48

waveydavey48 said:

Thanks folks. I'm in the "Direct Line Group Personal Pension". The total expense ratios for the 3 funds are 0.31%, 0.362% and 0.364.% In other words apparently cheaper than holding VLS60 in Vanguard's SIPP if that is 0.37%. I think drawdown is free with the scheme I'm in and I'm happy with the performance over the last 6 years so it seems sensible just to stay put. 

I've just read the bumph and it seems the new drawdown plan doesn't actually offer drawdown! Here's an extract, I have emboldened the relevant bit.

 "7. What are the differences between the Default Lifestyle and Legacy Lifestyle Strategies and the new Direct Line Drawdown Lifestyle Option? The new Direct Line Drawdown Lifestyle Option has been designed to be appropriate for members who are looking to access their retirement savings through income drawdown. This is where your retirement savings remain invested and you’re able to ‘draw down’ a regular amount to provide an income in retirement. Members can do this by transferring their retirement savings out of the Plan to their choice of external pension provider that offers this option. The Default Lifestyle and Legacy Lifestyle Strategies were designed for members who were looking to purchase an annuity at retirement."

waveydavey48

Albermarle said:

For you with £170k funds 1 holding 12 purchases per annum it estimates fidelity at £595 and Vanguard at £255

Can you clarify please. I have a pot of £170k which I won't be adding to. I will just draw from it as I need to. As such I don't plan on making any purchases after making the transfer of the £170k pot to VLS60. Can you say what charges I would pay?
Thanks and apologies if I confused things.

Albermarle

The platform fee for Fidelity SIPP  is 0.35% for funds but only 0.15% for Vanguard SIPP.
You can buy VLS 60 with Fidelity or of course with Vanguard - the cost is the same 0.22% . So overall Vanguard is cheaper to hold VLS 60 but with no drawdown facility.
However with Fidelity you have a lot more choice than Vanguard funds and a free drawdown facility.

You can not compare Fidelity SIPP with another fund than VLS 60 ,with Vanguard with VLS 60 as you are not comparing apples with apples.