Pension with Commercial Property

mike1967

Help and advise please.

my brother's pension scheme changed from final salary so he decided to move it and take the large compensation claim.

at the same time my company was looking to relocate, and owning our own property seemed the ideal solution.

so....

we managed to locate a premises and agreed a price of £ 220K

my brother transferred his pension fund of 110K into a new scheme
at the same time I transferred a personal plan of 20K into the same scheme

we purchased the property using a mix of our pensions and a mortgage of £ 138K (don't quite know why it was so much, but had to leave protective rights in the scheme)

the plan was to then use my companies lease to pay for the mortgage (plus a bit extra).. this would see the mortgage paid off in 10 years or less.

the plan was also to have the 138K shared 50/50 and money invested in the scheme share 50/50.... with the 'initial' investment growing at a percentage rate for each of us individually.

the scheme seems to have gone wrong, with the pension managers claiming that my brother will always own 85% of the fund and the property ! I will be left with just 15%

We are now seeking an alternative pension provider that can set the scheme up correctly..

any advice as to what we want to do is correct ? or suggestions on how we can get the scheme to work as we wish.

Mike

dunstonh

What pension wrapper (type of scheme) is the property within?

I have an idea how you will answer and if that is the case, then you should be seeking advice from an IFA.

mike1967

wrapper ?? i dont quite know what that means.

we put money into individual pensions - these were grouped and paid a large deposit for the premises. Contributions (i.e. lease payments) are being made into the fund, most is being used to pay off the mortgage, the surplus ??

i really have no idea - we had an IFA, but have now registered a complaint against as the scheme is in such a shambles.

we have a new IFA looking into it. but any suggestions would be appreciated.

dunstonh

The scheme sounds complicated but not uncommon. The complaint may not be justified as there are significant tax advantages the way it was done. Perhaps it would have been better to discuss your concerns with the original IFA and get a second opinion from another to make sure.

Also, many transactions are placed on the basis that they are one off transactions. If you do not pay for servicing and ongoing advice or the charge is not built within the product and their terms of business states there is no ongoing advice, then the IFA cannot be responsible if you didnt pay it.

To be honest, this is all guesswork. Although I have a theory, it could be a number of things and I would suggest you wait and see what the new IFA says. Your type of pension is not the type that can easily be discussed over a chat forum. It could do more damage than good by getting terms mixed up and giving you information on one type of pension when its really another that you have.

Wrapper means type of pension/investment - ISA is one wrapper, stakeholder is another, personal pension, investment bond, unit trust etc etc. With most of these "products" nowadays able to hold the same assets/investments within them, often the only difference between them are the tax rules, charges and terms of the "wrapper". Hence we see an increasing reference to tax wrappers. Advice is moving more towards picking investment funds/areas first and then picking the appropriate tax wrapper afterwards. In the past, is a ther other way round. Anyway, that takes you well off subject and isnt something you should concern yourself with at all.

mike1967

the 'old' IFA that set up the scheme - was paid around 8K in comission for the job, we also paid hansomely for the efforts.

if only i could have spoken with the original IFA... once the money was in their grubby hands they no longer wanted to speak with me, as it was taking too much of his time !

i can see it's complicated - i will wait and see what the new IFA has to say.

at the moment we have been shafted and the IFA that we employred to do a job didn't do so to our satisfaction and requests but made a healthy 10K for the work !!

EdInvestor

Was this done under a SIPP (self invested personal pension) or SSAS (small self administered [occupational pension] scheme) perhaps?

You can hold commercial property (typically the company's office/ doctors or dentist surgery ) within such schemes and the pension fund can borrow money to buy the property. It's a common approach by small businesses/partnerships.

mike1967

its a SIPP as far as i am aware - that's what its always been referred as.

the 'holding' is not the issue, it's the distribution of the share of the property.

EdInvestor

mike1967 wrote:

its a SIPP as far as i am aware - that's what its always been referred as.

the 'holding' is not the issue, it's the distribution of the share of the property.

If you and your brother as members of the SIPP both agree it's been wrongly set up, then you can surely just instruct the trustees ( the SIPP provider) to change the arrangement? Might need to be legalised as there's quite a bot of money involved.There's no requirement to deal with the SIPP provider via an IFA - you can go direct.