Cash inside pension vs buying a money market fund?

GazzaBloom

I plan to accumulate some risk-off cash within my pension next year as part of pre-retirement portfolio management. I want to hold around 3 years worth of cash/cash equivalent.

Aviva have confirmed they will pay BOE base rate on cash balances so that seems like the best risk free option, but, there is one money market fund offered, the Blackrock Sterling Liquidity Fund.

Does anyone see an advantage of buying the MMF over holding cash for a risk-off allocation?

the MMF seems to returning base rate or thereabouts

LHW99

Money Market funds have an ongoing annual charge, so you would need to factor that in, to see if it would still be better than the Aviva rate. You'd also (possibly) have buying / selling costs / delay?

tacpot12

MMFs seem to carry a lot more risk than cash. 

MK62

If you can get the BoE base rate on the cash in the pension, there seems little point in buying a sterling money market fund, which will very likely return a bit less anyway.

RoysV

MK62 said:

If you can get the BoE base rate on the cash in the pension, there seems little point in buying a sterling money market fund, which will very likely return a bit less anyway.

That's what I thought. It seems very good from Aviva, Vanguards rate is just 2.60% for cash held in account

RogerPensionGuy

GazzaBloom said:

I plan to accumulate some risk-off cash within my pension next year as part of pre-retirement portfolio management. I want to hold around 3 years worth of cash/cash equivalent.

Aviva have confirmed they will pay BOE base rate on cash balances so that seems like the best risk free option, but, there is one money market fund offered, the Blackrock Sterling Liquidity Fund.

Does anyone see an advantage of buying the MMF over holding cash for a risk-off allocation?

the MMF seems to returning base rate or thereabouts

Nice Post here, thanks.

Do Aviva pay interest on cash daily, monthly or yearly, does anyone know?

GazzaBloom

RogerPensionGuy said:

GazzaBloom said:

I plan to accumulate some risk-off cash within my pension next year as part of pre-retirement portfolio management. I want to hold around 3 years worth of cash/cash equivalent.

Aviva have confirmed they will pay BOE base rate on cash balances so that seems like the best risk free option, but, there is one money market fund offered, the Blackrock Sterling Liquidity Fund.

Does anyone see an advantage of buying the MMF over holding cash for a risk-off allocation?

the MMF seems to returning base rate or thereabouts

Nice Post here, thanks.

Do Aviva pay interest on cash daily, monthly or yearly, does anyone know?

I believe it's monthly for me, that seems to be the case on a small amount of cash I have at present, it's my workplace pension, an Aviva Flexible Retirement Account:

They confirmed this in July this year

"As your policy is an FRA it will accrue interest on the cash balance.

The interest rate on the 03/07/2023 is 5%.

If you have any questions, please do not hesitate to contact us using the details above. 

Kind regards,
****** **********
Client Administration Support | Aviva My Money"
  

GazzaBloom

MK62 said:

If you can get the BoE base rate on the cash in the pension, there seems little point in buying a sterling money market fund, which will very likely return a bit less anyway.

Agreed, just thought I would make sure there was no angle with regards MMFs I was missing.

Lifematters

Do Aviva charge for holding cash in SIPP?  Are there any SIPP providers that do not charge for holding cash and pay comparable interest rates? 

GazzaBloom

Lifematters said:

Do Aviva charge for holding cash in SIPP?  Are there any SIPP providers that do not charge for holding cash and pay comparable interest rates? 

I'm not sure, will let you know at the end of January!

ian16527

There was something in the paper (unfortunately D mail) regarding the skim off companies are making because of the difference between BOE rate and the rate they pay. HL were quoted to have made alot of money out of this although they do not charge for holding cash. There was a table showing the rates of different providers. The FCA or FSA(cant remember which is correct) has given them until next April to address this I think.
AJ BELL have increased their rates.
I am disappointed with Vanguard who I have my SIPP with as they are taking the proverbial as well.