Vanguard Retirement Fund

[Hollyhocks7]

Hi, I intend to start a personal pension, I want a simple low cost managed fund which I can just contribute to on a monthly basis and leave to hopefully accumulate over the next 20 years. I have looked at SIPPs but don't think I have enough knowledge to made investment decisions myself and would be better off with a ready made portfolio, such as offered by Legal and General or Scottish Widows. Does anyone know whether the Vanguard Retirement Fund is a completely managed fund ? It seems to be listed as a SIPP but looks like the funds are selected by Vanguard and the balance of stocks and shares change gradually so that there is less risk as you approach retirement. Thank you

Following for interest!

Vanguard have a good reputation but I don't know the details of this fund.

ETFs can be a good option because they track the market without needing expensive active management fees.

The target date retirement funds have a manager, so are not completely passive funds, but they use underlying passive funds. So like the LifeStrategy range, they are rebalanced for you by the fund manager. A simple set and forget.

The issue with Retirement Date funds is that they adjust the equity to bond/gilt as you get closer to retirement date. That may be fine if you intend to buy an annuity but may not be good if you intend to do flexi-access drawdown.
Consider how intentional you want to be when it comes to equity:bonds ratio.

I prefer being more in control, so use a fund with a fixed equity:bond ratio, and I intend to build a cashflow ladder when near retirement.

Cashflow ladder is explained in this podcast: meaningfulmoney.tv/UG8

What do you hope to gain from using a managed pension, vs using a SIPP?

Having someone pick funds for you, active management, may out perform the market in some years, but not all the time and comes at a cost. So I use a fund which sets an objective and has a manager who just adjusts the allocation to stay with that objective. The underlying funds buy the whole index they are tracking, or replicate the index using sampling. So they are low cost and run mostly by a computer.

also following. Have you looked at life strategy? I believe these funds are well regarded.

I suppose I am thinking a managed fund would be better because I don't want to have to monitor too closely or make investment decisions as SIPPs are designed for, I think I want mainly tracker funds but hadn't appreciated the restriction around drawdown/annuity options with the Retirement Fund @nannynick , so thanks for pointing that out, I'll look into it. And I'll look at the Life Strategy Fund thanks @KevinDeBrioche sounds like something I could simply pay money into each month. I am aware that Vanguard is one of the lowest cost providers and think this is quite important too.

I meant portfolio rather than fund, a ready made pension

With a Vanguard retirement date fund or a lifestrategy fund you do not have to monitor it, do anything.

You make the initial decision of which fund to be in, setup the recurring payment in to it, then maybe look at it once a year, aiming to increase the amount you pay in. The less you look at it the better, as then you do not get scared by drops in value due to market fluctuations.

These off the shelf portfolios are really easy to use. SIPP is the wrapper around it. The SIPP is not fully functional - it is a simple SIPP as you cannot have property in it, or anything fancy... it is just a pension wrapper which the provider (platform) manages, providing the admin system for taking in payments, obtaining tax relief, and buying units in the investment.

The platform also arranged access at retirement - Vanguard Investor does flexi-access drawdown using a process called UFPLS which enables a payment to be made to you where 25% is tax free and 75% is taxable. Don't worry about that now though, over many years things can change, admin systems will improve and taxes will definitely change.

Focus on now. Set something up which is simple and low cost. A Vanguard Investor SIPP with a LifeStrategy fund or a Retirement Date fund in is fine. Just be aware that the retirement date fund will change the equity percentage as you get closer to retirement.

See if this video is of any help:

In this video Damien talks about a ready-made SIPP. Using a fund like Vanguard LifeStrategy or Retirement Date fund, is like a ready-made SIPP in that you choose the fund and then the fund does everything for you. You are not picking individual shares, you are not rebalancing each year to keep the equity:bond allocation on track. The fund does that for you... just like a ready-made SIPP.

Thank you for your explanation about off the shelf portfolios, @nannynick it has helped clarify things for me, and the video is great, I've been looking his website which also has an article comparing SIPPs and personal pensions.

Having read some more on Money to the Masses, I'm thinking of going for the Vanguard Life Strategy fund but through Interactive Investor, which apparently can be cheaper than with Vanguard direct, depending on the size of the funds held. Does anyone have any experience of II?

@Hollyhocks7 I note your post is a month old so you may have decided what to do by now.
I have had a very good experience with Interactive Investor having moved various investments there from Fidelity earlier in the year on the recommendation of a family member who works for an IFA (recommendation based on ii low fees). Investments include Vanguard life strategy and other Vanguard funds which have performed well and I’m again happy with.

However for various reasons I wanted to transfer some of those funds to Vanguard and had a shocking experience dealing with Vanguard themselves, so bad I gave up. So I’m sticking with keeping everything with ii.

Thanks @BarqsHasBite , yes I did decide to go for ii and have been pleased so far, it took me a while to work out how to set up the direct debit for a monthly investment, but I managed it, and when I called customer services afterwards to check that it was correct the person I spoke to was very helpful. I've gone for Vanguard Life Strategy 60.