Vanguard - Moving funds to drawdown and change to II

ian16527

I have posted about this before last year, but I was given some incorrect information by Vanguard then.

I usually keep 2-3 years money in a STMMF which I would like to use for drawdown, in case of market fluctuations. 

When you go through the drawdown process you specify which funds or cash to move the money to, but you cannot select which funds to take the money from in the Pre retirement part of the account.

So I have had issues for 3 years going through this process. They will take the TFLS out of cash or divest investments - which is fair enough - but then will divest from all the funds to move the 75% taxable part over to drawdown. There was a problem last year where they lost £200 in the process ( been told it was probably human error).

Thinking of changing to II - Anyone use then for drawdown? The Fund value is only £150k so will be slightly more expensive than Vanguard. 

SVaz

Surely the answer is to sell some STMMF to cash before drawing down? 

ian16527

SVaz said:

Surely the answer is to sell some STMMF to cash before drawing down? 

Thats what I thought but only for the TFLS

This is what I did but then they will still divest from all the funds for the remaining 75%

I am waiting a complaint reply to actually see what they say this time

SVaz

I wonder if it’s a quirk exclusive to Vanguard or others do it that way because of notional split?  

I’m with AJ Bell for my main Sipp and I’d be furious if they sold funds rather than using available cash that I’d put there by selling a money market fund. 

ian16527

SVaz said:

I wonder if it’s a quirk exclusive to Vanguard or others do it that way because of notional split?  

I’m with AJ Bell for my main Sipp and I’d be furious if they sold funds rather than using available cash that I’d put there by selling a money market fund. 

I have been a little cross about it, but I cannot understand why they do it this way - makes no sense.

LHW99

For II you need the cash ready in the account if taking tax-free cash (or UFPLS), but as they do a % split (rather than having two separate "pots" for the crystallised / uncrystallised) the remainder stays as it was invested before you start the process (if that's what you want)

Albermarle

ian16527 said:

SVaz said:

Surely the answer is to sell some STMMF to cash before drawing down? 

Thats what I thought but only for the TFLS

This is what I did but then they will still divest from all the funds for the remaining 75%

I am waiting a complaint reply to actually see what they say this time

I am not fully clear what you mean by 'divest' - do they liquidate all the investments to cash?

My SIPP provider - Fidelity - have two separate pots for uncrystallised funds and crystallised funds ( drawdown account.

When I took my first tax free cash amount, I made sure there was enough cash there and it was paid from that.
I asked that the 75% part should remain invested in the same funds and the same proportions.
This is what happened but it seems they were not just transferred across, although is what appeared to happen at first sight.
You can see from the transaction details and the % growth figures quoted since that date, that the investments appear to have been  sold in the pension account, and rebought in the new drawdown account.
That is how it looks , although it could be just the way that Fidelity admin processes work .

ian16527

Albermarle said:

ian16527 said:

SVaz said:

Surely the answer is to sell some STMMF to cash before drawing down? 

Thats what I thought but only for the TFLS

This is what I did but then they will still divest from all the funds for the remaining 75%

I am waiting a complaint reply to actually see what they say this time

I am not fully clear what you mean by 'divest' - do they liquidate all the investments to cash?

My SIPP provider - Fidelity - have two separate pots for uncrystallised funds and crystallised funds ( drawdown account.

When I took my first tax free cash amount, I made sure there was enough cash there and it was paid from that.
I asked that the 75% part should remain invested in the same funds and the same proportions.
This is what happened but it seems they were not just transferred across, although is what appeared to happen at first sight.
You can see from the transaction details and the % growth figures quoted since that date, that the investments appear to have been  sold in the pension account, and rebought in the new drawdown account.
That is how it looks , although it could be just the way that Fidelity admin processes work .

Yes I mean sell some of the funds to cash, probably divest is not the correct term. 

I am not sure if Vanguard transfer in specie, but I think they sell and re buy as well.

I used to be with Fidelity - they were fine with drawdown but expensive for me as I used funds rather than ETF's.  I had I also had a bad interaction with a customer service adviser who froze all my accounts.

Vanguard have the same - Pre retirement pot and drawdown pot.  I like to keep 2-3 years drawdown in a STMMF or cash just in case of adverse market movements in the funds in Pre retirement so I don't have to touch them. 

I also like to move just what I need each year to drawdown for that years income. 

So Vanguard will use any cash and/or then sell pro rata from the remaining funds to obtain cash to provide the tax free 25%. 

But  for the remaining 75% being transferred over, they will sell funds pro rata. You cannot specify which funds, as I would like to use the STMMF Cash fund. But you can specify which funds you want the transferred cash to be placed in the drawdown fund......

ian16527

I complained last year, and I got this response

"You wanted this to be taken from your Sterling short term money market accumulation fund however it is not possible to specify where the funds come from it is only possible to specify where the funds will be invested once the drawdown is complete.

For the drawdown we will use any available cash and we will then disinvest from all funds proportionately for any remaining amount required.

It is detailed in the key features document on our website that funds will be disinvested proportionately."

The bit in bold is deemed to be wrong according to this years advisor - he says this is for TFLS only. I am waiting to see what is correct although the T&C,s agrees with him.

ian16527

LHW99 said:

For II you need the cash ready in the account if taking tax-free cash (or UFPLS), but as they do a % split (rather than having two separate "pots" for the crystallised / uncrystallised) the remainder stays as it was invested before you start the process (if that's what you want)

So for example in II, I could sell some of the STMMF to cash then use this for drawdown but for tax free cash only.

What about flexi access drawdown or do they not offer this?

daveshep26

ian16527 said:

Albermarle said:

ian16527 said:

SVaz said:

Surely the answer is to sell some STMMF to cash before drawing down? 

Thats what I thought but only for the TFLS
........... in the pension account, and rebought in the new drawdown account.

That is how it looks , although it could be just the way that Fidelity admin processes work .

Yes I mean sell some of the funds to cash, probably divest is not the correct term. 

I am not sure if Vanguard transfer in specie, but I think they sell and re buy as well.

I used to be with Fidelity - they were fine with drawdown but expensive for me as I used funds rather than ETF's.  I had I also had a bad interaction with a customer service adviser who froze all my accounts.

I transferred Vanguard SIPP (to ii) in specie in Aug to Sept last year - that element was very straightforward - other admin parts of the process less so (at Vanguard end )- but overall ok/ fine - but 'in specie' will work