Property & Pension Funds

Property & Pension Funds FAQS

Below, we have answered some frequently asked questions concerning buying property with a pension fund

• What is a SIPP?

  A SIPP is a tax-efficient savings vehicle designed to help individuals save for retirement. They offer individuals more control and flexibility over their pension investments compared to traditional pension schemes.

  Key features of SIPPs include:

  • Investment choice – a SIPP allows a person to choose from a wide range of investments, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), commercial property, and more. This flexibility gives investors the opportunity to create a diversified portfolio tailored to their specific retirement goals and risk tolerance.
  • Control – With SIPPs, account holders have more control over their pension investments. They can make investment decisions, buy and sell assets, and manage their portfolio according to their preferences.
  • Tax benefits – SIPPs offer tax advantages to encourage retirement savings. Contributions to a SIPP are typically eligible for tax relief, meaning that the government contributes additional funds to the pension pot. Additionally, investments within a SIPP can grow tax-free, and there may be tax benefits when taking retirement income.
  • Flexibility – A SIPP provides flexibility in terms of when and how individuals can access their pension savings. Typically, individuals can start drawing their pension from the age of 55, but they can choose to continue investing or delay withdrawals if they wish.
  • Inheritance planning – SIPPs can also be used as part of an inheritance planning strategy. They can be passed on to beneficiaries upon the account holder’s death, potentially providing a financial legacy.

  However, while SIPPs offer many benefits, they also come with certain risks, including the potential for investment losses. Therefore, individuals considering a SIPP should carefully assess their investment knowledge, objectives, and risk tolerance before opening one.

  If you would like some advice regarding SIPPs, please contact a member of our Investment Management team.

• What is a SSAS?

  A SSAS is designed for business owners, directors, and key employees of small to medium-sized companies to provide them with a way to save for retirement while also offering more control and flexibility over their pension assets.

  The key features of SSAS include:

  • Control and flexibility – One of the primary advantages of a SSAS is the level of control and flexibility it provides. Members of the scheme, who are typically key individuals within the business, have significant control over investment decisions and the management of pension assets. This allows for more tailored and strategic investment choices.
  • Investment option – SSASs offer a wide range of investment options, similar to SIPPs. Members can invest in various assets, including stocks, bonds, commercial property, and other investments, depending on the scheme’s specific rules and regulations.
  • Company ownership of assets – A unique feature of SSASs is that they can own assets on behalf of the scheme members. This can include commercial property or even shares in the sponsoring company. This feature can be used strategically for business purposes, such as owning company premises or facilitating business financing.
  • Tax benefits – Contributions made by the company to a SSAS are typically treated as an allowable business expense, reducing the company’s taxable profits. Additionally, investments within a SSAS can grow tax-free, and there may be tax benefits when taking retirement income.
  • Inheritance planning – SSASs can be used as part of an inheritance planning strategy. In the event of a member’s death, the assets held within the SSAS can often be passed on to beneficiaries, providing a potential financial legacy.
  • Regulation – SSASs are subject to regulation by The Pensions Regulator and must comply with specific rules and reporting requirements to ensure that they meet legal and regulatory standards.

  SSASs are generally suited for business owners and directors who want greater control over their pension investments and may wish to integrate their pension planning with their business strategy.

  However, they also come with certain responsibilities and administrative requirements, so it’s essential to seek professional advice. If you would like some further advice, please contact a member of our Investment Management team.