How to utilize your “frozen” pension before age 55.
Here at The Landlords Pension we have helped over 1000 people invest into property, many have achieved this by taking control of their existing and frozen personal and company pensions before the age of 55. Whether it is one or a number of different pensions, we have helped these clients set up a Property Pension (technically known as a SSAS – Small Self Administered Scheme) which gives them greater control and flexibility over what at the end of the day is their own pension fund.
Clients can choose to invest directly in commercial property or land through their pension or adopt a completely hands off approach through property bonds, which offer a fixed return over a fixed term with the security of a 1st legal charge over physical property. They can even arrange a loan from what is now their own pension scheme to their property company to buy property outright, pay for refurbishment costs or put towards deposits.
Why are people concerned?
Many individuals have chosen to invest in property rather than rely on the traditional route of stocks and shares based pension schemes to provide them with an income in retirement. The vast majority of our clients were concerned about the volatility of equity based investments in which both defined contribution (DC) personal and company pension funds were invested.
Looking to alternative ways of providing a retirement income is a growing trend. According to the Occupational Pension Scheme Survey (OPPS) report compiled by the Office for National Statistics (ONS) the amount of people with “frozen” company pension schemes in the private sector alone has risen from 6.5 million in 2015 to 11.2 million in 2016, a huge increase in investors abandoning the traditional pension route. This does mean however that a large number of people have left their money with financial institutions and fund managers to invest as they wish in the very same type of funds that the members wanted to move away from, which rather defeats the object.
Is my Final Salary scheme safe?
Unfortunately the news is also rather bleak for those who thought that they had a “gold plated” defined benefit (DB) scheme. These schemes, often referred to as final salary pension schemes, which are rare now, were often thought of as guaranteed. However, recent reports published by both Price Waterhouse Cooper (PWC) and the Pensions Institute on the current 5800 private sector DB schemes concluded that there was a deficit of £460 billion pounds across these schemes and that up to 1000 would be unable to meet their payment obligations to their retirees in full.
What are the choices?
The choice is really quite simple. Investors can either leave their funds where they are and pay for someone else to invest them randomly, or they can take control of their pension funds by transferring into a scheme where they are able in one way, shape or form to invest in property.
If you are worried about market volatility and begrudge paying the annual management charges levied by fund managers (regardless of whether they make or lose you money), then get in touch by phone or email. Join in with our clients who choose property.
If you would like to find out more about how The Landlords Pension could help you grow your retirement fund call us on 020 3907 8400 to speak with one of our experienced consultants.