Vanguard: New Minimum Monthly Account charge

Section62

NoMore said:

The fees have to be paid.

You have the money for the fees in your bank account. Just put 80% of that money in the Pension and you pay the fees from the pension and save yourself 20%. 

Unless your at the limit of pension contributions so you can't add and would be forced to sell within the pension (like slinky, though personally in the situation I would still pay from within Pension), I don't see where this doesn't save you money.

You still pay £100 whether you pay it from the SIPP or pay it from the bank account.

There's no saving by paying it from the SIPP because the tax relief is still money, the fact it is government money doesn't really make much difference because if you spend it on fees it is still £20 you no longer possess.

Refining my previous post, I think it matters if (like slinky and I) you've hit your personal contribution limit(s) and still have cash sitting around in accounts subject to tax.  I'd guess the reverse is true when you get to drawdown if you have to pay tax on what is coming out of the SIPP, but I've not thought that far ahead (yet), so would leave it up to one of the forum experts to make a more definitive comment.

where_are_we

Chadsman said:

where_are_we said:

jaxkesa said:

Started my transfer to Trading 212 6 weeks ago and still nothing!

My transfer was proceeding slowly so I pestered both Vanguard and Trading212 one morning and "lo and behold" the transfer went through that afternoon.

How long was it since you requested the transfer?

I requested a SIPP transfer on 2/1/25 from Vanguard to Invest Engine. It was completed on 19/2/25. So it took about 7 weeks.

equitydealer

where_are_we said:

Chadsman said:

where_are_we said:

jaxkesa said:

Started my transfer to Trading 212 6 weeks ago and still nothing!

My transfer was proceeding slowly so I pestered both Vanguard and Trading212 one morning and "lo and behold" the transfer went through that afternoon.

How long was it since you requested the transfer?

I requested a SIPP transfer on 2/1/25 from Vanguard to Invest Engine. It was completed on 19/2/25. So it took about 7 weeks.

You’re lucky I’m at 12 weeks and it’s a simple one ETF in-specie transfer

where_are_we

equitydealer said:

where_are_we said:

Chadsman said:

where_are_we said:

jaxkesa said:

Started my transfer to Trading 212 6 weeks ago and still nothing!

My transfer was proceeding slowly so I pestered both Vanguard and Trading212 one morning and "lo and behold" the transfer went through that afternoon.

How long was it since you requested the transfer?

I requested a SIPP transfer on 2/1/25 from Vanguard to Invest Engine. It was completed on 19/2/25. So it took about 7 weeks.

You’re lucky I’m at 12 weeks and it’s a simple one ETF in-specie transfer

An in-specie transfer was not an option for me and I sold my Vanguard investments as part of the transfer process. I sold my Global Tracker, transferred in cash which probably quickened up the move. I reinvested in 50% Global Tracker ETF and 50% CSH2 ETF because I wanted to reduce risk.

NoMore

Section62 said:

NoMore said:

The fees have to be paid.

You have the money for the fees in your bank account. Just put 80% of that money in the Pension and you pay the fees from the pension and save yourself 20%. 

Unless your at the limit of pension contributions so you can't add and would be forced to sell within the pension (like slinky, though personally in the situation I would still pay from within Pension), I don't see where this doesn't save you money.

You still pay £100 whether you pay it from the SIPP or pay it from the bank account.

Pay £100 from your bank account to pay the fees, you have £100 less.

You Pay £80 from bank account into Pension, it becomes £100 and you then pay the fees from there, You have paid the £100 fees and have £20 in your bank account.

How can you not see the difference between these.

Lets try another way. 

Instead of paying £100 from bank account, pay that £100 into your pension instead. It becomes £125, you pay the fees of £100 from the pension and you now have an extra £25 in your pension compared to having paid it from your bank account. 

Section62

NoMore said:

Pay £100 from your bank account to pay the fees, you have £100 less.

You Pay £80 from bank account into Pension, it becomes £100 and you then pay the fees from there, You have paid the £100 fees and have £20 in your bank account. (but you have £100 less in your SIPP)

How can you not see the difference between these.

You've missed the key point about the limit on contributions.

If the amount you are allowed to contribute is limited, and you look on the SIPP as a vehicle for growth, then we'll share the same perspective.

Putting some real-world numbers into the discussion.  Say this is the first year I'm paying into a SIPP.  I don't work, so my net contributions are limited to £2,880. I pay this from a bank account which had £3000 in it, so I now have £120 savings left.

The government kindly contributes £720 into my SIPP so I now have £3600 in the SIPP and still £120 in the bank account - a total wealth of £3720.

Then I have a choice -

a) To pay a £100 SIPP fee from my SIPP, in which case my SIPP would drop to £3500, plus savings of £120, which equals £3620.

or

b) To pay the £100 SIPP fee from my bank account in which case my SIPP would remain at £3600, plus savings of £20, which also equals £3620.

The choice makes no difference to how much I pay in fees to the SIPP provider aka "You [I] still pay £100 whether you [I] pay it from the SIPP or pay it from the bank account."

Nor does it make a difference to my total wealth.  But option 'b' means I have an extra £100 within a tax-resistant wrapper compared to adopting option 'a'.  I'll go with option 'b' (paying fees from my bank account) because it will probably work better in the long-term.

On the other hand, you are working so don't have the £3600 limit, yours is higher.  You can still put an extra £80 into the SIPP and watch it turn it into £100 and pay your fees from that.  The difference between us is you've gained £20 tax relief that in my personal circumstances I'm not entitled to.

What works for you does't work for me, and vice versa.

NoMore

No you still come out ahead.

You start with £2980, we will still go with the fees as £100 even tho that's unlikely for only having £3600 in a SIPP but it doesn't matter to the maths.

In Scenario 1, you pay from bank account, You put £2880 into SIPP it becomes £3600 and you pay £100 for fees from bank to leave zero. You with draw the £3600, 25% tax free is £900 and lets say the rest is taxed at 20% so leaves £2160 so total of £3060

In Scenario 2, you pay fees from SIPP, so you put £2880, leaving £100 still in your Bank account. Your £2880 becomes £3600, then £3500 after fees took. On withdrawal 25% tax free = £875 and the rest taxed at 20% = £2100. So £2975 total add the £100 you still have in bank and you end up with £3075.

However I will concede that if the return on your investments is higher in the SIPP than in the bank account you will come out ahead, but if you are doing the £2880 contribution just to gain the tax relief and then withdraw, paying fees from within the SIPP still wins.

I still think it works for the majority of people and its niche scenarios where it doesn't. You may well have one of the niche scenarios. I just don't want people to generally miss out on savings because they don't realise the advantage of paying fees from Pension (in probably most common scenarios).

Swipe

However, as mentioned earlier in the thread, we no longer have the choice to pay it solely from our Vanguard SIPP 

Section62

NoMore said:

No you still come out ahead.

We'll see...

In Scenario 1, you pay from bank account, You put £2880 into SIPP it becomes £3600 and you pay £100 for fees from bank to leave zero. You with draw the £3600, 25% tax free is £900 and lets say the rest is taxed at 20% so leaves £2160 so total of £3060

You've assumed I'll pay 20% tax.  What if I don't?

However I will concede that if the return on your investments is higher in the SIPP than in the bank account you will come out ahead, but if you are doing the £2880 contribution just to gain the tax relief and then withdraw, paying fees from within the SIPP still wins.

I could be wrong, but I'd guess paying in and then withdrawing is a somewhat more niche scenario than people making contributions to the max they are permitted (and leaving them invested).

I still think it works for the majority of people and its niche scenarios where it doesn't. You may well have one of the niche scenarios. I just don't want people to generally miss out on savings because they don't realise the advantage of paying fees from Pension (in probably most common scenarios).

Whereas I think it better if people think about their personal circumstances and adopt the right solution for them, rather than being told there is only one right answer.

NoMore

Yes I agree on your last point that people should think about their personal circumstances, and hopefully this discussion has enabled people to at least consider the maths of it to help decide as a lot of people may not realise that you could possibly be better of by doing it.