Vanguard Sipp

Easyjet77

Bravepants said:

I got this reponse when I asked about a potential cash SIPP transfer to Vanguard:

Vanguard currently pays the Bank of England base rate less 0.25%. This means that with the Bank of England rate at 3.5%, we are currently paying 3.25% 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' once its paid.

Please note, however, that Vanguard UK Personal Investor is designed as an investment platform, rather than as a home for cash savings. As such our cash rates are kept under ongoing review. We do offer a range of investment funds that may be suitable for investors with short term investment horizons, or immediate funding needs.

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.

I wonder how much pressure they apply to the customer to invest in one of their funds, or do they drop the interest rate for customers cheeky enough to keep, say,  mid-five figures in cash?

My spouse and myself both have cash with vanguard, both pension and ISA. Neither of us has had any contact or query from Vanguard re cash held. Indeed they are very helpful any time we contact them. 

Albermarle

I think all investment platforms and pensions are encouraged by the authorities to discourage customers from keeping too much in cash, rather than investing it. As in the long term this will give a worse result 

Easyjet77

Albermarle said:

I think all investment platforms and pensions are encouraged by the authorities to discourage customers from keeping too much in cash, rather than investing it. As in the long term this will give a worse result 

Vanguard have not ,in any way,discouraged us from holding cash in our accounts. It is part of our retirement strategy and works well alongside Vanguard investments. We can invest in funds easily when desired and equally draw cash when required. 

A_T

Albermarle said:

I think all investment platforms and pensions are encouraged by the authorities to discourage customers from keeping too much in cash, rather than investing it. As in the long term this will give a worse result 

These will be the same authorities that allowed Vanguard to state their Lifestrategy 20 was very low risk. For the last 5 years you'd have been better off holding cash

Albermarle

Easyjet77 said:

Albermarle said:

I think all investment platforms and pensions are encouraged by the authorities to discourage customers from keeping too much in cash, rather than investing it. As in the long term this will give a worse result 

Vanguard have not ,in any way,discouraged us from holding cash in our accounts. It is part of our retirement strategy and works well alongside Vanguard investments. We can invest in funds easily when desired and equally draw cash when required. 

Maybe they have not, but for sure the FCA have been concerned about people going into drawdown, and only holding cash. Each provider must now offer four simple Investment Pathways, to make it easier for less knowledgeable customers to invest their drawdown pot in an appropriate way. Also they have to strongly nudge them to have a call with PensionWise.

If you have a thought out strategy, which includes holding some cash, that is something different altogether.

dunstonh

Albermarle said:

I think all investment platforms and pensions are encouraged by the authorities to discourage customers from keeping too much in cash, rather than investing it. As in the long term this will give a worse result 

You are correct.  The platforms and providers are required to send out reminders to those that have a high ratio in cash.   Having a high ratio with a strategy is fine.  However, the FCA found that too may DIY investors were holding cash after drawdown due to indecision about investing.   

Bravepants

dunstonh said:

Albermarle said:

I think all investment platforms and pensions are encouraged by the authorities to discourage customers from keeping too much in cash, rather than investing it. As in the long term this will give a worse result 

You are correct.  The platforms and providers are required to send out reminders to those that have a high ratio in cash.   Having a high ratio with a strategy is fine.  However, the FCA found that too may DIY investors were holding cash after drawdown due to indecision about investing.   

In my case it is definitely a strategy. I'm reassured by Easyjet77's answer.

dunstonh

Bravepants said:

dunstonh said:

Albermarle said:

I think all investment platforms and pensions are encouraged by the authorities to discourage customers from keeping too much in cash, rather than investing it. As in the long term this will give a worse result 

You are correct.  The platforms and providers are required to send out reminders to those that have a high ratio in cash.   Having a high ratio with a strategy is fine.  However, the FCA found that too may DIY investors were holding cash after drawdown due to indecision about investing.   

In my case it is definitely a strategy. I'm reassured by Easyjet77's answer.

Don't worry. They wont force a move.  You will just get a cash notification letter saying that you hold a lot of cash and the negatives that can go with that.    If its part of your strategy, you can ignore the letter.