By now it’s no secret that I dislike investment expenses and continually work to minimise them in the most cost effective manner. I’ve also written previously about how my work defined contribution (DC) pension scheme gives no special benefits but does extract at least 0.6% in annual expenses. I’ve also previously written about how I take advantage of the pension partial transfer rules by transferring to either of my SIPP providers when they have some sort of special offer and I have a sensible amount of funds in my work DC pension.
Well Hargreaves Lansdown currently have a cash back offer running:
I also had a little over £10,000 in my work DC pension so again the used Hargreaves Lansdown electronic transfer service. It was another good experience with the online form being completed during last week’s bank holiday, Hargreaves Lansdown acknowledging my instructions on the Tuesday and the transfer being complete by the Friday. The end result:
Pretty simple and in comparison I was making it far more complicated than it needed to be...
Well Hargreaves Lansdown currently have a cash back offer running:
Click to enlarge, Cash back of between £20 and £500 available
I also had a little over £10,000 in my work DC pension so again the used Hargreaves Lansdown electronic transfer service. It was another good experience with the online form being completed during last week’s bank holiday, Hargreaves Lansdown acknowledging my instructions on the Tuesday and the transfer being complete by the Friday. The end result:
- Partial transfer completed in 4 days;
- Expenses reduced from 0.6% to between 0.07% and 0.19%. I bought Vanguard ETF’s and that is their annual expenses. On the Hargreaves Lansdown side, other than purchase costs, there are no extra expenses because I only buy shares/ETF’s in this SIPP and already have more than £44,444 which means my expenses are capped at £200;
- £20 will soon appear in my SIPP.
A man is a successIf he gets up in the morning and gets to bed at night,And in between he does what he wants to do.
Pretty simple and in comparison I was making it far more complicated than it needed to be...
Which Vanguard ETFs do you use? Some of them seem to be domiciled in Ireland, does that make any difference if you hold them in a SIPP or ISA? I.e. extra paperwork or anything like that.
ReplyDeleteHi Willy, the only extra complication is that an ETF domiciled in Ireland is subject to a different compensation scheme. The UK compensation scheme - run by the FSCS - means you could potentially recover £50,000 if an ETF provider went under and your money disappeared with it. An Irish domiciled scheme is subject to different rules and more likely to be protected to the tune of €20,000. If you ever hold an offshore fund outside of an ISA or SIPP then make sure it has UK Reporting Status or you'd pay capital gains tax at income tax levels. If you buy an ETF from a domicile other than Ireland then you're liable to be subject to a greater level of withholding tax if it holds non-UK securities. The above applies to funds as much as ETFs.
ReplyDeleteBottom line is: there are virtually no ETFs domiciled in the UK. And no useful ones I've ever found. It's completely fine to invest in Ireland based ETFs, no extra paperwork. Most of the above complexity doesn't apply to most people in practice.
TA, thanks for the detailed reply to Willy. For completeness I purchased VUSA and VJPN.
DeleteYes, thanks for the detailed reply.
ReplyDeleteDo you know if that cash back offer is available to know customers?
ReplyDeleteMy understanding is it's for anybody transferring a pension. It doesn't stipulate new or existing customers from what I've seen. I'm guessing it's not targeted at me as they make nothing but a couple of trades from my transfer. T&C's are here http://www.hl.co.uk/pensions/sipp/transfer-to-the-vantage-sipp#terms
DeleteI should highlight that the cash back is just a little bonus and not the main reason I transfer. The saved expenses are what make the difference. In my example (0.6%-(0.19%+0.07%)/2)*10,000=£47 per annum.
It'll be interesting to learn of your FIRE decision, RIT. As I've previously posted, I became FI last year.
ReplyDeleteI was recently offered the chance to go part-time with a new role (tailored to my interests) or be made redundant. Took quite a bit of soul searching as it is doubtful I'll ever be offered as large a settlement again - but I decided to stay. The new role moves the work very nearly into hobby territory and going part-time gives me the chance to experiment with a few other things.
I'll also be interested to learn of my decision Anon :-) Not long now, I think we're nearly there. It's a big decision and we want to make sure we're doing what we really want to do. Thus the quote this week. We've actually made a decision and are currently in a RIT family cooling off period.
DeleteOn a serious note this FI thing is great isn't it? All of a sudden the world opens up. In your example if you were dependent on a full salary you'd have no choice but to be made redundant and look for a new job elsewhere. In your case your day job moves towards hobby territory. Congratulations!
Anon ... don't be surprised if your employers don't come back in 6-12 months time and ask you to go back to full time! Employers love the idea of reducing the wage bill, but are never so keen that you are no longer their five days a week, at their beck and call. Here's to f**k you money, as Taleb would say.
DeleteYou might be right, Felice. They've already bumped their earlier offer from 3 days to 4. But most of the rest of my new team are on 4 days inc. new boss so fairly hopeful.
DeleteYep, it's great, RIT. It really did come down to - do I like the company, my boss & colleagues and the work enough to continue? I hope you figure out what works for you and yours.
Weren't you tempted to take redundancy and then just wait for them to phone you with an offer?
DeleteAnonymous,
DeleteIf you drop from full time to part time instead of taking redundancy, would that effect a future redundancy payment? Would it be based on number of years times salary?
Rough excample, say you earn £2k a month full time and have been there 15 years, a redundancy payment might be 15 x £2k = £30k. If you drop part time for £1k a month would the redundancy drop to just 15 x £1k = £15k? So you earn £12k for an extra year but lose £15k redundancy? Net your employer has you working a year to pay them £3k?
Well done RIT. Here's to making the decision soon. Myself, doing "One more year" to allow for more wiggle room to manoeuvre, but essentially have the FU money and what with the weather, finding it very hard to muster the will to carry on.
ReplyDeleteGood on you. Go for it and enjoy.
I think we all have similar feelings as we approach FIRE. I'm within 1 year, or 2 if I want more wiggle room. It's a cross between Morgan Freeman in Shawshank Redemption, where he doesn't want to be in prison, but he's become institutionalised, and jumping out of a plane for the first time. You can read about it all you want, but won't know how it feels until you actually do it.
ReplyDeleteAnyway, please keep us informed of progress. It's a fascinating journey.
Thanks for the heads up / reminder on HL. They also have this offer on ISAs and I have been dragging my heels in transferring a cash ISA which just matured off a multi year fixed rate. Yes, a cash ISA - mad isn't it that I still have one of these. Just have to decide which ETFs or ITs to put it in. Good luck to you and your family with the FI decision. We were just driving up to a nature reserve on Saturday and I was thinking if / when I FIRE myself I can do that on a week day when it is quiet and on my own whim whenever the weather is nice. Other half (already retired early) says I need to have a plan to not get bored though! With the FI decision I find it a bit like standing on a cliff edge, the FI funds are lined up but it is a tricky one giving up the decent regular income.
ReplyDeleteI'm surprised that you can get the transfer done so quickly!
ReplyDeleteI have my work pension with AEGON and they takes a long long long time to transfer.
So much so, that the FTSE100 is about 10% higher than when I submitted my recent transfer (out in cash) request.
Who did you try and transfer to? Did you fill out a paper form or did you apply electronically? I think the electronic transfer system is provided by Origo. They list HL and Aegon as customers so if it was to HL it should have been much faster.
DeleteI use AJBell Youinvest - and transferring from another provider was very quick. It's just AEGON who are taking their time.
ReplyDeleteI also don't like the fact that AEGON receive my money and sit on it for 3 weeks before investing it every month. My wife is also with AEGON through work and hers is invested in under a week - why the difference? who knows.
FI - Article on 'brexit race' to retire to Europe in today's FT.
ReplyDeletehttps://on.ft.com/2LNt2ix