How do I invest a private pension pot at fixed interest rate?

Doctor_Who

stoem said:

artyboy said:

Of course the alternative here if the OP has a more 'standard' SIPP already is to put the funds in a sterling money market fund - it's not exactly the same as a fixed term savings account, but it will pay close to base rate, and the capital risk is (IMO) negligible.

Saves the need to open a more niche SIPP...

That’s basically what I had in mind. A product inside a SIPP that pays a similar fixed rate to a run of the mill cash ISA or fixed term savings account. It doesn’t have to be a ‘savings account inside a SIPP’’ setup. 

Or to put it another way: I’d like to de-risk some of my pension fund and take a 6% return over say two years. Then rethink/restructure after that time. 

Are you likely to be taking money out of the SIPP anytime soon? I have some of my SIPP invested in a short term money market fund, but this is only the money I plan to withdraw over the next couple of tax years; most of my SIPP is still invested in equities/bonds.

 Then rethink/restructure after that time. 

Does this mean you are trying to 'time the market', which rarely works for retail investors.

FIREDreamer

There’s an ETF with epic CSH2 that pays SONIA rate of approximately 5% pa - no dividend, it is an accumulating ETF.

Pat38493

You may want to have a look at this thread which I started a few weeks ago

https://forums.moneysavingexpert.com/discussion/6456509/choosing-a-money-market-fund/p1

Based on the feedback on this thread, I have put about 25% of my transferred pension into the Royal London money market fund, and I am also starting to build up the same in my employer scheme from ongoing monthly contributions.  Reasoning is that I am quite likely to want to take out most of my tax free cash to pay off the mortgage in mid 2025, so I will be accessing the money in about 2 years from now.

It won't pay 6%, but it will pay just below the BOE base rate at any point in time.  I guess it's probably quite unusual (?) for fixed term savings accounts to offer rates above the BOE rate, which is the situation we are in now - I assume this is because everybody believes that interest rates are on the way above 6% for a period of time.

Edit:  I don't know if Royal London is the "best" money market fund, it just happened to be the one that a couple of people recommended on that thread, and it was on the popular buy list at my provider as well.  Since investing in it, I have seen small gains every day, even on days when equities fell, which is exactly what I would expect from such a fund.

peterg1965

Supermarket type SIPPS don’t usually offer access to fixed rate deposit accounts. As has been stated a full SIPP usually does.  I am with InvestAcc Minerva SIPP and currently have all of my holdings, £220k, in fixed rate deposit accounts fixed at 4.3% Pa.  you can now get 5% Pa with a 1, 2 or 3 year fixed rate SIPPable deposit account with United Trust Bank and Punjab Bank - which are the current two best payers in this area - both covered by FCSC.

This really suits me at the moment and with my mix of DB and DC pensions it makes sense for me to take the risk and uncertainty out of my investments to provide real confidence that I will make my retirement plans and maintain the financial position I want to sustain my future requirements and plans. I was getting frustrated by the rollercoaster ride with OEICs.

I have now put my employer DC scheme funds into a low risk money market market fund and delighted to see it rise consistently every day!

L9XSS

As Above,my thoughts too, I’ve moved 150k of my pension into money market funds. I’m probably 4 years away from retiring. I still have 25% of my pension invested in various ETF’s that are paying regular dividends too.

shortseller09

peterg1965 said:

Supermarket type SIPPS don’t usually offer access to fixed rate deposit accounts. As has been stated a full SIPP usually does.  I am with InvestAcc Minerva SIPP and currently have all of my holdings, £220k, in fixed rate deposit accounts fixed at 4.3% Pa.  you can now get 5% Pa with a 1, 2 or 3 year fixed rate SIPPable deposit account with United Trust Bank and Punjab Bank - which are the current two best payers in this area - both covered by FCSC.

This really suits me at the moment and with my mix of DB and DC pensions it makes sense for me to take the risk and uncertainty out of my investments to provide real confidence that I will make my retirement plans and maintain the financial position I want to sustain my future requirements and plans. I was getting frustrated by the rollercoaster ride with OEICs.

I have now put my employer DC scheme funds into a low risk money market market fund and delighted to see it rise consistently every day!

Investacc Minerva SIPP also offers third party cash management platforms e.g. Insignis, which gives a much broader spread of providers. Insignis currently offer a 1 year fix with 4 or 5 different providers at 6%. There is a maximum fee of 0.25%, so worst case net 5.75%.

peterg1965

shortseller09 said:

peterg1965 said:

Supermarket type SIPPS don’t usually offer access to fixed rate deposit accounts. As has been stated a full SIPP usually does.  I am with InvestAcc Minerva SIPP and currently have all of my holdings, £220k, in fixed rate deposit accounts fixed at 4.3% Pa.  you can now get 5% Pa with a 1, 2 or 3 year fixed rate SIPPable deposit account with United Trust Bank and Punjab Bank - which are the current two best payers in this area - both covered by FCSC.

This really suits me at the moment and with my mix of DB and DC pensions it makes sense for me to take the risk and uncertainty out of my investments to provide real confidence that I will make my retirement plans and maintain the financial position I want to sustain my future requirements and plans. I was getting frustrated by the rollercoaster ride with OEICs.

I have now put my employer DC scheme funds into a low risk money market market fund and delighted to see it rise consistently every day!

Investacc Minerva SIPP also offers third party cash management platforms e.g. Insignis, which gives a much broader spread of providers. Insignis currently offer a 1 year fix with 4 or 5 different providers at 6%. There is a maximum fee of 0.25%, so worst case net 5.75%.

Thank you for pointing that out, i will scurry off and investigate further!

Pat38493

peterg1965 said:

shortseller09 said:

peterg1965 said:

Supermarket type SIPPS don’t usually offer access to fixed rate deposit accounts. As has been stated a full SIPP usually does.  I am with InvestAcc Minerva SIPP and currently have all of my holdings, £220k, in fixed rate deposit accounts fixed at 4.3% Pa.  you can now get 5% Pa with a 1, 2 or 3 year fixed rate SIPPable deposit account with United Trust Bank and Punjab Bank - which are the current two best payers in this area - both covered by FCSC.

This really suits me at the moment and with my mix of DB and DC pensions it makes sense for me to take the risk and uncertainty out of my investments to provide real confidence that I will make my retirement plans and maintain the financial position I want to sustain my future requirements and plans. I was getting frustrated by the rollercoaster ride with OEICs.

I have now put my employer DC scheme funds into a low risk money market market fund and delighted to see it rise consistently every day!

Investacc Minerva SIPP also offers third party cash management platforms e.g. Insignis, which gives a much broader spread of providers. Insignis currently offer a 1 year fix with 4 or 5 different providers at 6%. There is a maximum fee of 0.25%, so worst case net 5.75%.

Thank you for pointing that out, i will scurry off and investigate further!

When looking at this option as compared to a money market fund in a mainstream provider, I would suggest you take  into account the charges and charging structure - at a quick glance, the Minerva option looks like they have higher platform charges that might cancel out an extra % of interest but it will depend on your fund size (which you know), timing of withdrawals (it looks to me like Minerva have high charges for making withdrawals),  and future evolution of money market rates (which obviously you don't know).

I would be surprised if using that Minerva pension would make long term sense if you are only going into is to allow you to put pension money in savings accounts, as it looks like it's more targeted at more specialist topics from the website, but as always, I am prepared to be proved wrong.

peterg1965

Pat38493 said:

peterg1965 said:

shortseller09 said:

peterg1965 said:

Supermarket type SIPPS don’t usually offer access to fixed rate deposit accounts. As has been stated a full SIPP usually does.  I am with InvestAcc Minerva SIPP and currently have all of my holdings, £220k, in fixed rate deposit accounts fixed at 4.3% Pa.  you can now get 5% Pa with a 1, 2 or 3 year fixed rate SIPPable deposit account with United Trust Bank and Punjab Bank - which are the current two best payers in this area - both covered by FCSC.

This really suits me at the moment and with my mix of DB and DC pensions it makes sense for me to take the risk and uncertainty out of my investments to provide real confidence that I will make my retirement plans and maintain the financial position I want to sustain my future requirements and plans. I was getting frustrated by the rollercoaster ride with OEICs.

I have now put my employer DC scheme funds into a low risk money market market fund and delighted to see it rise consistently every day!

Investacc Minerva SIPP also offers third party cash management platforms e.g. Insignis, which gives a much broader spread of providers. Insignis currently offer a 1 year fix with 4 or 5 different providers at 6%. There is a maximum fee of 0.25%, so worst case net 5.75%.

Thank you for pointing that out, i will scurry off and investigate further!

When looking at this option as compared to a money market fund in a mainstream provider, I would suggest you take  into account the charges and charging structure - at a quick glance, the Minerva option looks like they have higher platform charges that might cancel out an extra % of interest but it will depend on your fund size (which you know), timing of withdrawals (it looks to me like Minerva have high charges for making withdrawals),  and future evolution of money market rates (which obviously you don't know).

I would be surprised if using that Minerva pension would make long term sense if you are only going into is to allow you to put pension money in savings accounts, as it looks like it's more targeted at more specialist topics from the website, but as always, I am prepared to be proved wrong.

I pay Minerva £480 pa (inc VAT).  I was paying Fidelity 0.35% of my pension value (£220k and rising) so £770 pa minimum.

Once I get to retirement and drawdown I will re evaluate the most cost effective platform for this, but my initial look at Minerva was that it would be a £100 annual charge to initiate drawdown and take a monthly income from my account.
Minerva also now pay 3% on cash sat in the account, and if i added access to a SIPPable Cash Management Platform like Insignis, this increases the options available to stay in cash, albeit at the cost of their 0.25% fee.

So, although I am using a FULL SIPP for quite a simple investment option, it is not costing me more than being in a supermarket type SIPP, but i do have more options open to me.

cmundo

shortseller09 said:

peterg1965 said:

Supermarket type SIPPS don’t usually offer access to fixed rate deposit accounts. As has been stated a full SIPP usually does.  I am with InvestAcc Minerva SIPP and currently have all of my holdings, £220k, in fixed rate deposit accounts fixed at 4.3% Pa.  you can now get 5% Pa with a 1, 2 or 3 year fixed rate SIPPable deposit account with United Trust Bank and Punjab Bank - which are the current two best payers in this area - both covered by FCSC.

This really suits me at the moment and with my mix of DB and DC pensions it makes sense for me to take the risk and uncertainty out of my investments to provide real confidence that I will make my retirement plans and maintain the financial position I want to sustain my future requirements and plans. I was getting frustrated by the rollercoaster ride with OEICs.

I have now put my employer DC scheme funds into a low risk money market market fund and delighted to see it rise consistently every day!

Investacc Minerva SIPP also offers third party cash management platforms e.g. Insignis, which gives a much broader spread of providers. Insignis currently offer a 1 year fix with 4 or 5 different providers at 6%. There is a maximum fee of 0.25%, so worst case net 5.75%.

Just out of interest how can you view which fixed term deposits are available through Investacc?