Vanguard SIPP - be careful when you move assets to drawdown

ian16527

Not sure how other people do this, but I move only what I need to drawdown for the year every Feb/March.

With Vanguard you need to make sure to transfer what you need to move to cash.

They ask you what funds you want to invest in when transferred but you have no say what they will sell if you have not enough cash and sell funds pro rata. They then buy them back in the drawdown account which can cause a loss in the current volatility in the market. 

They don't do in specie transfers between accounts either. I wanted to move a short term money market fund to the same in drawdown not possible. I only incurred a £200 loss due to market moves so I only have myself to blame for assuming they would transfer the funds in specie.

I cant find anywhere where they say in the process that you need to be in cash or pro rata sell off are used 

I used to be with Fidelity and sure they asked what funds to use to fund the transfer

Hoenir

Holding a permanent cash buffer might be a better option than attempting to time the market when liquidating investments. 

RoysV

I've posted something similar the other day https://forums.moneysavingexpert.com/discussion/6593909/sipp-withdrawal
I do the same as you and only put into drawdown what I need for the year but what also happened was I got a secure message saying I didn't have enough money in my drawdown account to make my next payment, the last one of the year.
The money has been in STMM all year without a problem.
I had over what I wanted to take in my STMM but a small amount in cash so they said because of that it couldn't be processed, but during the year I've always had a small amount of cash and it's never been a problem. So I'm at a bit of a loss as to what's going on.
To be fair I'm still not convinced that they aren't trying to pay me twice at the end of this month, which would mean I didn't have enough, but they assured me this wasn't the case 

ian16527

Hoenir said:

Holding a permanent cash buffer might be a better option than attempting to time the market when liquidating investments. 

Yes I used to do this, but I now know that I will have to switch enough into cash in advance
.
I wasn't trying to time the market as I wanted to use the Short Term Money market fund as I have a few years of drawdown cash in there currently. I initiated the drawdown transfer just as Donald started his antics so that didnt help.

The point is that Vanguard give you 3 options about what you want to do with the funds once transferred: 
1. Use the same funds as per the pre retirement acc
2. Use their pathways
3. Pick your own. - which I did - the STMMF

It at no point gives you a warning that the funds will be disinvested and reinvested with several days delay, and nowhere says they cannot do an in specie transfer between accounts which I find very odd.

Not sure how AJ Bell, HL and Fideity handle this.

Hoenir

With AJ Bell there's a cash account facility with the SIPP. That the drawdown is effected from. Makes the process pretty seamless. I allow dividends and other income received to accumulate rather being reinvested.