We regularly meet business people who are disillusioned with traditional pension planning, a lack of control, poor performing investments and inflexibility are just three of the issues often raised.
These concerns, plus seemingly constant interferenceby government of whichever colour, has led to some extreme negativity when it comes to pensions.
But it doesn’t have to be that way, especially if you are in business; there are plenty of ways in which your pension can help your business.
Self Invested Pension Options
It’s true that a traditional pension, for example a Stakeholder or Personal Pension Plan are pretty restricted in what they can invest in, principally funds, which many people find hard to understand, are often disappointed by the performance and dislike the lack of control.
That’s where self invested pensions can reignite people’s interest in their pension, firstly though a bit of technical stuff.
Without wanting to get too much into the jargon of our industry, and we do love a technical phrase or a three letter acronym, there are principally two types of self invested pension, namely a SIPP (Self Invested Personal Pension) or a SSAS (Small Self Administered Scheme). We’ll cover the difference in a later blog but for now just run with us when we say there are two types.
Both types of self invested pensions can be opened by paying in new contributions or by transferring in existing pension schemes.
A word of warning though, before you transfer in old pension schemes check, or indeed get an Independent Financial Adviser to check that you are not losing valuable guarantees from your existing scheme. For example you would be highly unlikely to be better off by transferring out of a Final Salary or Defined Benefit pension into a SIPP or a SSAS.
So, what can a SIPP or SSAS do to help my business?
There are a wide range of options, for example:
- Buy commercial property for you or another business to trade from, why pay rent to an anonymous landlord when you can pay it to your own pension?
- Lend money to your business, loans must be secured and on commercial terms, but it can be a more straightforward option than the bank
- Buy shares in a limited company
- Buy commercial property that you already own to help improve cashflow
- By Intellectual Property from your company, again to help the cashflow of your business
These are just five examples; there are others, in future blogs we will look at these options in more detail.
If you are feeling negative towards your pension, remember that you have other options including private providers like Now Pensions, which might provide more flexibility and put you back in control, at the same time as helping your business.