There are a variety of options to use your pension pot beyond taking it all out in one lump sum. A common way to increase the flexibility of your pension that we are increasingly seeing here at Giles Wilson is through Self Invested Personal Pensions (SIPPs).
In basic terms, a SIPP is a self-managed pension plan that allows the holder of that plan to choose and manage the investment of the monies in the pension ‘pot’. They allow you to invest the money accrued almost anywhere you like, such as investment trusts and individual shares in stock.
SIPPs and Commercial Property
One of the most common ways is to use a SIPP to invest in property. However, Government regulations mean that SIPPs can only buy commercial property, and therefore no residential purchases through this method are allowed.
Broadly speaking, you would use your pension pot, and a mortgage if required, to buy a commercial property. The rental income generated by it would go back into the pension pot, as well as any proceeds from selling the property (unless of course any mortgage needs to be paid off).
There are a variety of SIPP providers available to help handle your pension. However, it’s important to understand the flexibility offered by a SIPP investment comes with significant responsibilities in managing your finances, and should be handled with the aid of professional trustee companies. Our team have worked with national and localised trustees in the past, and can assist both you and the trustees through this process to handle all the legalities surrounding the acquisition.
Our experienced solicitors in Essex can walk you through any complex property questions in order to manage your investment. If you are planning on purchasing a commercial property through your SIPP, you should consider reading our blog outlining changes to Stamp Duty, which may result in a saving on expenses.
Call us on 01702 477106 to arrange a consultation, or get in touch through Facebook, Twitter, Google+, LinkedIn and Instagram.