Vanguard SIPP 20% tax relief investment allocation

Hilly264

Dear Forum

I'm considering setting up a SIPP with Vanguard. My understanding is that the 20% tax relief from the government is received a few weeks after making a contribution.

Does anyone know if the 20% tax relief gets automatically allocated to the same investments that the initial pension contribution went to? Or will I keep having to log into the Vanguard account to check for the receipt of the tax relief and then manually allocate that myself?

Thank you

QrizB

I have a small pension pot with Vanguard.

Hilly264 said:

Does anyone know if the 20% tax relief gets automatically allocated to the same investments that the initial pension contribution went to?

No, it doesn't. (Edit: D&C [next post] says you can, so I'll need to look into that!)

Hilly264 said:

Or will I keep having to log into the Vanguard account to check for the receipt of the tax relief and then manually allocate that myself?

Yes, you will.

You'll also find you accumulate dribs and drabs of cash from various sources (interest, dividends, money left-over because you can only buy whole units of your funds, etc) that you need to manually sweep up too.

Dazed_and_C0nfused

Hilly264 said:

Dear Forum

I'm considering setting up a SIPP with Vanguard. My understanding is that the 20% tax relief from the government is received a few weeks after making a contribution.

Does anyone know if the 20% tax relief gets automatically allocated to the same investments that the initial pension contribution went to? Or will I keep having to log into the Vanguard account to check for the receipt of the tax relief and then manually allocate that myself?

Thank you

With Vanguard you can set it up like that for regular payments.

Hilly264

Thank you for replying. So if I make just a one off pension contribution then I'd need to manually allocate the tax relief myself and if I set up a regular monthly payment then I can have the tax relief automatically allocated?

And regarding the dribs and drabs from only being able to invest in whole units. Am I correct in thinking that this only applies to ETFs? I am looking at investing in mutual funds that accumulate the dividends and I thought I could buy a part share so all of my pension contribution gets invested. 

   

Dazed_and_C0nfused

Hilly264 said:

Thank you for replying. So if I make just a one off pension contribution then I'd need to manually allocate the tax relief myself and if I set up a regular monthly payment then I can have the tax relief automatically allocated?

And regarding the dribs and drabs from only being able to invest in whole units. Am I correct in thinking that this only applies to ETFs? I am looking at investing in mutual funds that accumulate the dividends and I thought I could buy a part share so all of my pension contribution gets invested. 

   

With funds I'm sure your contribution (the net amount and subsequent tax relief) is 100% used to buy units (including fractions).

You may be able to do the same for one off payments but haven't tried that myself.

Don't know about ETF's.

You could message Vanguard and get the definitive answer?

MK62

My contribution and then the tax relief both get invested in the same funds.......I assume that's the default as I did nothing other than pick funds (for regular investing). I've never checked whether you can change that behaviour though.

As for funds (unit trusts and oeics), buying fractions of units is the norm........never bought an ETF with Vanguard, but on other platforms it's been whole shares only, whenever I've bought ETFs.

Hilly264

Thank you very much. Yes, I thought from my research that was the case with funds but I've never actually invested in any before, or ETFs. I will get in touch with Vanguard and confirm things on the tax relief automatic investment. It seems like a bit of a hassle to me to have to keep checking for the tax relief receipt in order to then manually invest it so I'm hoping set things up so it's all done automatically.   

Dazed_and_C0nfused

Hilly264 said:

Thank you very much. Yes, I thought from my research that was the case with funds but I've never actually invested in any before, or ETFs. I will get in touch with Vanguard and confirm things on the tax relief automatic investment. It seems like a bit of a hassle to me to have to keep checking for the tax relief receipt in order to then manually invest it so I'm hoping set things up so it's all done automatically.   

You would only need to check like that once As it will be received at the same time each month.

dunstonh

It seems like a bit of a hassle to me to have to keep checking for the tax relief receipt in order to then manually invest it so I'm hoping set things up so it's all done automatically.   

That is why many providers/platforms will pre-fund the tax free cash and follow through your investment selection.   Vanguard don't prefund (most basic or budget plans don't)