Fidelity SIPP paying interest (don't get too excited)

Exodi

To clear up the above:

Vanguards website states that they "currently keep up to 0.20% of any interest we receive on cash held in your account, to cover our costs of administering it." - applicable to S&S ISA's and GIA's. https://www.vanguardinvestor.co.uk/need-help/answer/will-i-receive-interest-on-cash-held-in-my-isa-or-general-account

Vanguards website also states that they "don't currently pay interest on cash held in your account. This is due to the low Bank of England base rate. The 0.05% interest we receive for holding your cash is kept to cover our costs." - applicable to their SIPP. https://www.vanguardinvestor.co.uk/need-help/answer/will-i-receive-interest-on-cash-held-in-my-personal-pension

Though I have suspicions the SIPP page is likely out of date and it's possible that the SIPP interest terms are the same as the investment accounts, though the website currently states otherwise.

Charging 0.2% to 'cover the costs' of holding cash is an odd way to do it, considering they set the interest rate they pay on cash... seems needlessly complicated, just say you pay 1.05% interest on cash.

Also to clear up another point of potential confusion above, I'm not sure that vanguard charges the AMC on cash (though I could of course be wrong, I use multiple platforms so sometimes it's hard to keep track - HL certainly doesn't).

cloud_dog

Exodi said:

Also to clear up another point of potential confusion above, I'm not sure that vanguard charges the AMC on cash (though I could of course be wrong, I use multiple platforms so sometimes it's hard to keep track - HL certainly doesn't).

As far as I am aware they apply their platform charge against the entire pot. 

I know AJ Bell YouInvest and Fidelity (in addition to HL) do not apply a platform charge against cash.

midlandsimon

If cash is where you want to hold your funds then find a PP/SIPP provider who provides access to external easy access/ fixed term cash accounts. Some 'decent' rates to be found at the minute.

cloud_dog

Yeah.  Until recent history (rising rates) interest on cash in the pensions was not really a consideration.  It still isn't really, but useful for awareness.

NedS

cloud_dog said:

Yeah.  Until recent history (rising rates) interest on cash in the pensions was not really a consideration.  It still isn't really, but useful for awareness.

I find it useful. I always tend to keep a little dry powder to take advantage of any buying opportunities that arise (and I'm yet to encounter a year where there wasn't a buying opportunity). Having a little interest on that cash to help offset any platform fees charged gives me a warm fuzzy feeling, especially when my platform charges reassuringly expensive platform fees!

Mr_blibby

I'm looking for a new home for my SIPP, mostly in cash. Checked situation with Vanguard. see below. So for me, with the £375 cap on the 0.15% fees they charge, this would be a relatively low risk way of making c £10k pa, maybe more if interest rates go up again through the rest of the year. Would be nice if they also offered  some longer term deposits as further options. 

" With the Bank of England rate at 1.75%, Vanguard does currently pay 1.50% interest on cash held, this accrues daily and is paid monthly to your Vanguard account in arrears.

You will be able to see any interest under 'Transactions' > 'Cash statement'.

Please note that all holdings in your Vanguard account are subject to our 0.15% account fee, and this includes any cash that you hold. The account fee is calculated daily and charged quarterly.

On top of this charge, we also have the fund ongoing charges (OCF). This is paid to Vanguard for managing the individual fund and its associated costs. This ranges from 0.06% to 0.78% depending on which funds you invest into and are displayed on the website. As well as the OCF, funds have transaction and incidental costs. You’ll see the total cost of the fund in the costs and charges document which is produced at the final stage of the investment process."

cloud_dog

Just foe clarity they keep 0.2% of the interest they pay.

A_T

It's a shame Vanguard don't just post this information on their website rather than us having to ask for it. It would be easy to maintain and update as necessary