Vanguard SIPP Review – An Honest Opinion

by | Jan 9, 2024 | SIPP Reviews

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In this Vanguard SIPP review, we focus mainly on the fees and investment choice, becuase it’s what most people find most important when comparing SIPP providers.

But we also look at customer service reputation, platform functionality other key features so you can get a well-rounded understanding of the Vanguard SIPP and how it compares to other options on the market.

Key Takeaways:

  • The Vanguard SIPP offers a low-cost and transparent pension solution – it’s typically the cheapest SIPP for portfolios under £100k
  • It’s the cheapest SIPP that has a percentage based fee (but can be more expensive than some flat fee providers especially for bigger pension pots)
  • This is thanks to is annual account fee of 0.15%, capped at £375.
  • But the main drawback – you can only choose from a range of Vanguard’s own funds.
  • This includes index funds and ETFs, many of which have low underlying chargers, but compared to other SIPPs gives you less investment choice.
  • The minimum investment amount is £500 or a monthly contribution of £100.
  • Vanguard’s SIPP does not charge setup or exit fees.
  • Expert opinions on the Vanguard SIPP are positive, highlighting its low-cost structure and simplicity.
  • Customer reviews of the Vanguard SIPP have been largely positive, praising its user-friendly platform and customer service.

While you’re here, read our SIPP provider comparison guide that includes a comparison of Vanguard’s SIPP to the rest of the market more broadly.

SIPP Provider Fees Calculator

If you know roughly what assets your SIPP portfolio is going to consist of, you can enter the values into our SIPP fees calculator below to get a rough estimate of the annual fees each SIPP provider would charge you based on their fee structures.

It’s split between funds and equities because some providers charge different amounts for each asset class (this is worked into the calculator).

Note: The ongoing fees for your SIPP are only one type of SIPP charge, so are not the only factor to consider (although it is the most significant charge you’ll pay). Also, you should think about other SIPP features and benefits including customer service, and the user experience of the platform.

What is a SIPP?

Before diving into the specifics of the Vanguard SIPP, it’s important to understand what exactly a SIPP is and how it functions within the realm of retirement planning.

A SIPP, or Self-Invested Personal Pension, is a type of personal pension that gives you more control over your investments compared to other types of pension schemes. With a SIPP, you have the freedom to choose where your pension contributions are invested, whether it’s in individual stocks, bonds, funds, or other assets. Although with Vanguard, you can only choose Vanguard’s own funds.

Unlike traditional personal pensions, which are typically managed by pension providers, a SIPP allows you to make your own investment decisions. This means you can tailor your pension portfolio to match your investment goals and risk tolerance.

The flexibility of a SIPP also extends to the withdrawal phase of your pension.

Once you reach the age of 55, you can start withdrawing money from your SIPP, whether that’s in the form of regular income or lump sum payments. 

However, it’s important to note that any withdrawals you make from your SIPP will be subject to income tax.

Key Points about a SIPP:

  • A SIPP is a self-invested personal pension that allows you to choose your own investments.
  • You have control over where your pension contributions are invested, including stocks, bonds, funds, and other assets.
  • You can tailor your pension portfolio to match your investment goals and risk tolerance.
  • At the age of 55, you can start withdrawing money from your SIPP, subject to income tax.

Vanguard SIPP Review – Key Information

Vanguard is known for its low-cost investment products, and its SIPP is no exception.

The Vanguard SIPP comes with an annual account fee of 0.15%, which is capped at £375 (which equates to a portfolio value of £250,000).

This fee applies to all your holdings on Vanguard, including your SIPP, ISA, and general account. However, it does not include the Junior ISA for your children.

This is the lowest percentage-based SIPP fee on the market currently. However, the Freetrade SIPP and ii SIPP have flat monthly account fees that can work out cheaper for some portfolios (it depends on the value).

And the main sticking point on the Vanguard SIPP is the investment choice. While it’s not small choice, it’s not as comprehensive as other SIPPs because you can only invest in Vanguard funds.

Vanguard has a great reputation for investment management and their funds are generally low-cost (an average ongoing fund charge of 0.2%), but this restriction can’t be ignored.

Whether you’re happy with that investment choice or not depends on your preferences and your investment goals, but it’s just good to be aware of the pros and cons of different providers.

Another standout features of the Vanguard SIPP is the low minimum investment amount. 

You can either pay a lump sum of £500 or contribute £100 per month. This accessibility makes it easier for individuals to start saving for their retirement without a significant upfront investment.

In addition to the low fees and minimum investment amount, Vanguard also offers fee-free transactions for buying and selling products within the SIPP. 

And it does eliminate various charges that other platforms may impose, such as wrapper charges, setup charges, exit fees, and transfer fees.

Key Information:Vanguard SIPP
Annual Account Fee0.15% (capped at £375)
Minimum InvestmentLump sum £500, or £100 per month
Transaction FeesFree for buying and selling
No Additional ChargesWrapper charge, setup charge, exit fee, transfer fee

Features and Fees

Key Features of the Vanguard SIPPVanguard SIPP Fees
– Self Invested Personal Pension– Annual account fee: 0.15% of account value (capped at £375 per year)
– Low-cost and flexible– No setup or exit fees
– Wide range of Vanguard funds– No additional SIPP administration fee
– Minimum investment of £500 lump sum or £100 monthly– Ongoing fund charges: range from 0.06% to 0.78% (average 0.20%)

Is the Vanguard SIPP Right for You?

While the Vanguard SIPP offers many advantages, it may not be the best fit for everyone.

Consider your investment goals, risk tolerance, and investment preferences before making a decision.

If you prefer a wider range of investment options beyond Vanguard funds or have specific requirements for your pension plan, it may be worth exploring other providers in the market.

It’s also important to consider your long-term investment strategy and seek professional financial advice if needed. A financial advisor can help you assess your individual circumstances and determine if the Vanguard SIPP is a suitable choice for you.

Vanguard SIPP vs Other Providers

In a sea of pension providers, how does the Vanguard SIPP stack up against the competition? Let’s compare it to other providers and see how it stands out.

Vanguard is cheaper than all the other percentage fee-based SIPP providers:

But Freetrade and Interactive Investor generally offer a lower SIPP cost because of their fixed monthly ongoing fees.

Interactive Investor’s monthly fee is £12.99 on portfolios over £50k, which comes to £155.88 per year. Vanguard’s 0.15% ongoing fee is £150 per year for a portfolio of £100k. So, anything under that and Vanguard is cheaper – except where you get to £50k.

At this point, Interactive Investor’s monthly fee drops to £5.99, meaning an annual cost of just £71.88. For a Vanguard SIPP, you’d need a portfolio of less than about £45,000 for it to still be the cheapest.

Use our SIPP fee provider calculator to get a better comparison based on your portfolio size:

Aside from fees, the Vanguard SIPP is also limited to only investing in Vanguard funds.

So, you can invest in shares, investment trusts, or other ETFs and funds etc.

Vanguard’s fund range is comprehensive, competitively priced and well-regarded, but the limitation of choice is undeniable.

For comparison, most other SIPPs let you invest in a wide range of funds and shares, including Interactive Investor.

The Freetrade SIPP only lets you invest in equities (shares, ETFs, Investment Trusts etc.), so this is also restricted.

Customer Reviews and Performance Analysis

What are customers saying about the Vanguard SIPP? 

Based on customer reviews, the Vanguard SIPP has received positive feedback for its low-cost structure and simplicity. Many customers appreciate the low platform fee of 0.15% and the fact that there are no hidden costs or additional charges for transactions. The capped fee of £375 per year also appeals to investors, especially those with larger pension pots.

Customers have also praised the Vanguard SIPP for its wide range of Vanguard funds available for investment. While some investors prefer more esoteric funds, many find that the selection of Vanguard funds meets their investment needs. The ability to invest in Vanguard’s own funds is seen as a positive, given the company’s reputation for low-cost index funds.

Customer Reviews:

  • “I’ve been using the Vanguard SIPP for a few years now and I couldn’t be happier with it. The low fees and wide selection of funds make it an ideal choice for passive investors like myself.” – John D.
  • “I transferred my existing pension to the Vanguard SIPP and it was a seamless process. The platform is user-friendly and the performance of the funds has been impressive.” – Jane S.
  • “I’ve been investing in the Vanguard SIPP for over a decade and it has consistently delivered strong returns. The simplicity and low costs are a major advantage for long-term investors.” – David M.
Advantages of Vanguard SIPPDisadvantages of Vanguard SIPP
Low platform fee of 0.15%
No hidden costs or additional charges
Wide range of Vanguard funds available
Limited to investing in Vanguard funds
Minimum investment amount of £100 per month or £500 lump sum
No access to more esoteric or niche funds

Conclusion – Is the Vanguard SIPP Right for You?

Is this pension product the best option for you?

Advantages of the Vanguard SIPP:

  • The Vanguard SIPP offers a low-cost solution for self-invested pensions, with a platform fee of only 0.15%. This makes it one of the most competitive options in the market.
  • There are no additional fees for account setup, exit, or transfers, making it a cost-effective choice for those looking to consolidate their pension pots.
  • The minimum investment amount is affordable, with the option to start with a lump sum of £500 or contribute £100 per month.
  • Investors can choose from a wide range of Vanguard funds, including index funds, ETFs, and managed funds, allowing for diversification and flexibility.

Disadvantages of the Vanguard SIPP:

  • The Vanguard SIPP only allows investment in Vanguard funds, limiting the options for those seeking a more diverse portfolio with investments outside of Vanguard’s offerings.
  • While the platform fee is low, the ongoing fund charges can range from 0.06% to 0.78%. Investors should carefully consider these charges in relation to their investment goals.
  • The minimum investment amount of £500 may be higher than expected for some individuals, potentially deterring those looking to start saving into a pension with smaller contributions.
  • Investors who prefer a more hands-off approach and rely on financial advisers may find that the Vanguard SIPP is not recommended by advisers who have their own platforms.

Based on the advantages and disadvantages, the Vanguard SIPP is an attractive option for individuals seeking a low-cost, self-invested pension platform. It offers competitive fees, flexibility in investment options, and ease of use. However, it may not be the best choice for those looking for a wider range of investment options or who rely heavily on financial advisers. Ultimately, the suitability of the Vanguard SIPP will depend on individual preferences, investment goals, and risk tolerance.

FAQ

Q: What is a SIPP?

A: A SIPP, or Self Invested Personal Pension, is a type of personal pension that gives you control over how your pension savings are invested. It allows you to choose from a wide range of investment options, including funds, shares, and bonds.

Q: What is the key information about the Vanguard SIPP?

A: The Vanguard SIPP has a fee of 0.15% per year, capped at £375. It offers a range of Vanguard funds for investment and has a minimum investment amount of £500 lump sum or £100 per month. The Vanguard SIPP does not charge setup or exit fees and provides free access to valuation statements.

Q: How does the Vanguard SIPP compare to other providers?

A: The Vanguard SIPP is competitively priced compared to other providers, particularly for investors with less than £100k invested. However, for investors with larger portfolios or those who prefer a fixed fee structure, other providers may offer a more cost-effective option.

Q: What do customer reviews and performance analysis say about the Vanguard SIPP?

A: Customer reviews of the Vanguard SIPP are generally positive, praising its low fees and ease of use. Performance analysis shows that Vanguard’s index funds have consistently delivered competitive returns compared to their benchmarks.

Q: What do experts say about the Vanguard SIPP?

A: Experts have noted the Vanguard SIPP’s competitive fees and its potential to disrupt the pensions market. However, they also emphasise the importance of considering the quality of service provided by a platform, as low cost is not the only factor to consider when choosing a pension provider.

Q: Is the Vanguard SIPP the right choice for me?

A: The suitability of the Vanguard SIPP depends on your individual circumstances and preferences. If you prefer a low-cost, self-directed pension with access to Vanguard funds, the Vanguard SIPP may be a good option. However, it’s important to consider your investment goals, risk tolerance, and desired level of control before making a decision.

About The Author

Sam Hodgson

Sam Hodgson

Head of Digital

Sam is our Head of Digital, overseeing all of our editorial and marketing strategies.

He has over a decade of pension industry experience, previously working & writing for the likes of HSBC and Hargreaves Lansdown.

His goal is to empower “non-financey” people to have confidence in making their own financial decisions, particularly on pensions and retirement planning.

Contact: sam@sippadvice.co.uk

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