Pensions

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Pensions

We want to help you feel in control of your retirement plans, empowering you to a comfortable retirement.

You may be working and have the objective to retire early but just don’t know whether you can afford to. We can help you to make that kind of decision with confidence.

Perhaps you are about to retire but are bewildered by all the options available to you since the pension rules changed.

Should you:

Draw down your pension?

Take a Lifetime Annuity?

Take a tax-free lump sum?

We can look at your particular situation together with what you want to do in retirement and advise you on the best course of action.

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How we can help

Many clients seek advice on a collection of different pension plans that they have built up over their working life. It’s hard to envision the future benefits that 6 or 7 individual pension plans can deliver. Part of our process is to run cash flow models that build onscreen graphs and charts to show clients future potential scenarios and give a guide as to what level of wealth they could be enjoying when they come to retire.

A good pension plan requires ongoing management whether that’s during the years of build up or post retirement as you begin to enjoy the lifestyle your pension provides. By reviewing your pension regularly you can ensure it remains on track to meet your needs.

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Get in touch today to find out how Gordian Financial Services can help you

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Self Invested Personal Pension (SIPP)

This section deals with a more complex form of pension where the client takes on a significantly greater level of investment decision making. The vast majority of SIPPS that I have helped clients establish over the years have been to purchase commercial property using their pension funds.

A lot of financial advisers know about SIPPs, we have to study them in the exams we take, but few regularly support clients through the process. Over the years not only have I gained experience and problem solving but I have built up a trusted team of specialist property lawyer, chartered valuer, specialist surveyors etc. so I can co-ordinate the process for my clients and that means I minimise their stress and maximise their gains.

If you read this and head off to take advice from another adviser all I would say is ask them if their office is owned by their SIPP, if not… why not? It’s a bit like trusting a skinny chef!

VIDEO

Understanding SIPPs

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How a SIPP works

A SIPP is still bound by the same rules and regulations that a standard personal pension with a pension provider is governed by, however instead of handing over the investment decisions to a fund manager in the city, the owner of the SIPP chooses what their pension invests in.

This becomes a very tax efficient solution for businesses who need to operate out of a commercial premise, be that a shop, office, factory or even a yard or storage facility.

It can be easier to say what is either not permitted or very difficult to gain HMRC approval to be allowed to be owned by the SIPP.

So residential property is not permitted and if a person sleeps in the property then HMRC really don’t like them being held in a SIPP, so Hotels and Nursing Homes would be problematic if at all possible.

Case study

Example SIPP

A great example is the accountancy firm I work closely with.

They had the opportunity to buy the office premise they had been renting for several years. The senior partner had a pension fund with a leading pension provider, we transferred that to a specialist SIPP provider that can manage individual commercial property purchase transactions. He also made a pension contribution to bring the pension fund up to the purchase price. This helped reduce his company’s corporation tax liability as pension contributions are a deductible business expense.

His SIPP, through his investment direction, purchased the building and this brought with it many tax benefits that as you can imagine were very appealing to an accountant :-

No income tax on the rent the pension receives

No capital gains tax on the growth the building achieves whilst owned by the pension

The value of assets inside a pension normally fall outside of a client’s estate for the calculation of Inheritance tax

Should death occur pre age 75, then the value of their SIPP is paid out free of tax.

The SIPP has to charge a full commercial rent to his business, but that’s not an issue because he knows the rent his company pays is ending up in his pension and not in the pocket of the fat cat landlord.

There are costs and charges to achieve this and there is a lack of investment diversification as all his pension is invested in one property, on one street in a town in Yorkshire. In addition his business is the tenant, so if his business were to fail the rent would cease and his SIPP would be left looking for a new tenant or to sell the building.

This is why using pension funds in this way is complex and needs to be very carefully considered.

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Are SIPPs right for you?

SIPPs are definitely not right for everyone, but for clients that are paying rent to a 3rd party they may want to consider the pros and cons carefully and we can discuss how it might fit into their financial future.

I’ve naturally gravitated to the tax gains and savings this brings but one of the SIPP clients I worked with put a very powerful emotional gain to this. She is a Physiotherapist and purchased the building she operates her studio out of, she explained to me that now she was effectively her own landlord she knew that there would never be a surprise letter telling her the lease won’t be renewed.

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25 Westgate Otley,
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LS21 3AT

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Gordian Financial Services offers face to face financial advice.

With over 30 years’ experience, find out today how we can help you achieve your financial goals.