Vanguard tweaks fund transfer rules for pension savers
The low-cost platform is now allowing in-specie transfers so investors can move existing Vanguard funds directly into their Vanguard personal pension (Self-Invested Personal Pension – SIPP).
As an example, if investors hold a Vanguard fund via another platform such as Hargreaves Lansdown, this can now be directly transferred to Vanguard.
Previously, one drawback of the Vanguard SIPP which only launched in February this year was that any existing Vanguard funds held with competitor platforms would need to be sold and re-bought if investors wanted to bring the fund ‘in-house’.
This meant time out of the market for investors during the process and they would also need to pay selling and exit fees depending on the platform.
But now, the circa 19,000 Vanguard SIPP customers can make a ‘seamless’ transfer without having to sell them first.
However, depending on which rival platform investors may hold existing Vanguard funds with, they may still need to pay exit fees during the switch.
The investment giant also confirmed that non-Vanguard funds can’t currently be transferred into the SIPP.
One investor said overall, this is a positive step for Vanguard investors elsewhere, but added: “It seems a long way off becoming a full ‘whole of market’ platform which can accept other fund managers.”
Adrian Lowcock, head of personal investing at Willis Owen, said: “Improving in-specie transfers for investors is always a good thing as many are put off having to sell and buy back the funds again a few weeks or possibly months later, which given how volatile markets can be could materially impact the value of a portfolio.
“Being out of the market for even a few weeks and having no control over that is something that puts investors off transferring and consolidating their pensions.
“Investors should make sure the platform they use has the right combination of price, choice and service as it is this that delivers value for money. The cheapest option might not be the right one for some, whilst for others, they may not want or need lots of choice. Having the most fund options on a platform is not as important as it once was. The key is having the right options and a range of choices available for different types of investors.”