Vanguard app for Pension Drawdown - advice please

EAB2

Hi there

I was thinking of using WTW Lifesight for drawdown as the charges are minimal, but the administration is appalling and there is no flexibility to mix and match FAD with UFPLS.

So I'm thinking about Vanguard as their fund charges are about as low as you can get and I already pay the platform fee for my ISAs.

Would anyone who uses Vanguard for pension drawdown be happy to share some screenshots of how it works? I asked them if they had a user video and they said no.

I'm particularly interested in the following scenarios

• First time moving funds from a work DC scheme to Vanguard - how does/do the new pot/pots appear in the app?
• Making a withdrawal. At what point do you tell it you want to
  • use FAD, taking some tax free money and leaving the remaining 75% of that withdrawal in the secondary 'drawdown' account?
  • use UFPLS to just move a certain amount to your bank, 25% of which will be tax free?
• Can you set up a regular withdrawal, or do you have to manage every individual withdrawal and tell it which funds to sell?
• Any other intricacies I should know about?

Many thanks in advance

Albermarle

WTW ( and other large pension administrators) are well known for their poor admin and service, so you are right to be looking at transferring out from them.

A modern pension will normally be very flexible on withdrawals, but I can not comment on the exact practicalities of using Vanguard.

ian16527

I use Vanguard for drawdown.

Its easy to transfer pensions in. You will get 2 accounts - Pre Retirement initially and when you crystalise some of this, then Pension Drawdown account.

Its an easy site to navigate and use. If you already have an ISA then this will show as well.

I just crystalise what I need to drawdown around January and they will divest the funds pro rata to move to the drawdown account. They will also use any cash to provide the TFLS element but if not enough cash then they will divest pro rata again. You can do this yourself for the TFLS and sell what funds you want to create a cash pot prior to setting the movement in motion. They will pay you the TFLS first

Then when you want to take the pension you chose which method you want to use,I use Flexi drawdown, set the amount per month, they will send a retirement statement and book a phone call. All easy.

The only problem I have is that they insist on selling funds pro rata, rather than letting you chose which funds to divest when transferring from Pre Retirement to Drawdown. I keep 2 years drawdown in a STMMF and would like to use this to fund the drawdown account but alas cannot.

EAB2

Thanks @ian16527

I'm considering using an annuity to insure against the risk of outliving my pension given how high the rates are right now - perhaps buying £150,000 of an annuity which at current rates would produce around £12,000 guaranteed income for life, rather than having a portion of my pension in bonds or cash. The remaining pension would be 100% stocks for the growth engine.

Any idea how I'd get the money from the the pre-retirement pot to an annuity provider without incurring a tax charge?

QrizB

Any idea how I'd get the money from the the pre-retirement pot to an annuity provider without incurring a tax charge?

A partial transfer. This is bread-and-butter for annuity providers. The annuity provider will also pay your TFC.

RoysV

https://forums.moneysavingexpert.com/discussion/comment/82151637#Comment_82151637

Yep the pro rata thing seems daft to me as we've discussed before. I'm just in the process of sorting mine this year, looks like for the first time I'm not going to need a phone call and it's all going through. They seem to change the rules every time I do something with them 😁

EAB2

https://forums.moneysavingexpert.com/discussion/comment/82152133#Comment_82152133

Thanks @RoysV

Presumably there is no other way to do this - they can't be guessing at how people want to divest their funds. So as long as there is the workaround that you sell what you want and move into cash before making a withdrawal it's still pretty flexbile

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82152211#Comment_82152211

By doing this pro rata selling of funds, they are acting more like one of the traditional pension insurers, like Scottish Widows, Standard Life etc. Although in most cases these providers do not even have a cash fund, so I think even the TFLS comes from pro rata selling of funds.

EAB2

https://forums.moneysavingexpert.com/discussion/comment/82151947#Comment_82151947

I did some quotes and it's a very attractive option to me right now.

I'm only 55 and in good health so hopefully will live another 30 years, I can get 7% from Canada Life for a single life with no increase - that's £11,000 a year for £160k. So if I live those 30 years I'm getting £330k out of that 'investment'.

Or I could get the £11,200pa for 20 years and get £100,000 back at the end, so my £60,000 'investment' gets me £224k.

Seems quite a good hedge against market falls given that otherwise I'd have to have money in cash or bonds and worry about how little they were making. Much less complicated than building a bond ladder with Gilts.

£160k growing at 4% and taking £11,000 a year would run out in 19 years if my maths is correct. The majority of the pension stays in equities of course

RoysV

https://forums.moneysavingexpert.com/discussion/comment/82152211#Comment_82152211

I'm certain it's only the tax free part you can put into cash, although I wasn't told you could do this. @Ian16527 had a thread about it maybe a year ago

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82152258#Comment_82152258

The issue is of course inflation.

After 30 years, your £11,000 pa would only be worth in the region of £5,000 pa in todays money ( depending on actual inflation rates)

You would expect a medium risk multi asset fund, to return something like inflation + 2 % each year on average.

It is only common sense that risk based investments should give you more in the long term, than non risk based instruments ( like annuities ) - otherwise nobody would invest in riskier assets.