Pension Pot - Self Invested options?

Fishing_Simon

Help please!

This is my first post on here (although I have been lurking for a while now) - what I wanted to ask is regards to my personal pension. Its with AXA and I have had it nearly 20 years now (I'm 39 currently) and although I havent been paying in as much as I should really have (do many of us?) it has built up but to be honest I am very dissapointed with the returns it has produced.

OK I fully understand the risks and the can go up as well as down arguements - but the return is terrible to be fair and I was considering knocking it on the head - I would be better off buying another house and doing it up. Then a friend of mine said that I could borrow against it and use that money to buy property... dont know if thats right but doesnt sound possible.

Anyway having done a bit more basic research I think I understand that its possible to buy property and place it into your own self invested retirement fund - perhaps someone could clarify this for me, I did write to AXA but they came back to me saying that they no longer allow individuals to invest in a wider range of assests? Sounds like a bit of a fob off letter to me.

I have my own business and would benefit greatly if I could buy a commercial property through my pension and use that for my offices rather than pay £1000 a month on my current lease - surely that would be massively better investment than just hoping that the fund my pension is stuck in right now does well. If all else fails could I swap to another pension provider and transfer my fund to them??

Help please - sorry for asking such a long one!

dunstonh

Then a friend of mine said that I could borrow against it and use that money to buy property... dont know if thats right but doesnt sound possible.

Your friend is wrong.

Anyway having done a bit more basic research I think I understand that its possible to buy property and place it into your own self invested retirement fund - perhaps someone could clarify this for me

It has to be commercial property. Not residential.

I did write to AXA but they came back to me saying that they no longer allow individuals to invest in a wider range of assests? Sounds like a bit of a fob off letter to me.

It would be a fob off as they can only answer it technically and what is applicable to their contract. The FSA regulation prevents them doing otherwise.

I have my own business and would benefit greatly if I could buy a commercial property through my pension and use that for my offices rather than pay £1000 a month on my current lease - surely that would be massively better investment than just hoping that the fund my pension is stuck in right now does well. If all else fails could I swap to another pension provider and transfer my fund to them??

You can do that but it has issues and consequences. You also need to look at why your existing fund has done poorly in your opinion and if its a case of it being in an obsolete investment or something that should have been altered years ago (better late then never).

Fishing_Simon

Thanks for the quick reply.

OK - I'm with you now. And yes it would be commecial property as I would want to use it as my office and warehouse and then pay rent from my company into the fund.

So as they are fobbing me off how should I respond to their letter telling me that I just cant do it? I realise there are concequences in doing this and the only difference I see is that I will own a commecial property (or my pension trust will) and I will effectively be paying myself rent rather than throwing money down the drain! Perhaps I'm missing something but cant see how a pension thats achieveing very little can beat me investing in myself - worst comes to worst my pension would be in my building and that should appreciate as well if bought now in my area.

dunstonh

So as they are fobbing me off how should I respond to their letter telling me that I just cant do it?

Its wrong to say they are fobbing you off. They cant tell you want you want to hear and their contract doesnt do it so they are not wrong either.

Perhaps I'm missing something but cant see how a pension thats achieveing very little can beat me investing in myself - worst comes to worst my pension would be in my building and that should appreciate as well if bought now in my area.

You are just looking at the pension as being one fund. Yet there are over 50,000 out there. So, whilst the one you have may not have met your expectations, it doesnt mean they are all like that.

Property in a pension has advantages but its not a cheap option. Also you will cease to be owner and the trustees will insist on a number of things happening which you would not have to pay as owner but will have to be paid for out of the pension. For as many people moving the commercial property into the pension, there are those moving out as they didnt realise the limitations or consequences.

It can be a good thing, dont get me wrong but it can also be the wrong thing to do as well.

BLB53

Simon,
There has been quite a lot of articles in the financial pages recently about under-performing pension plans. A big factor is their historically high charges due to introductory and trail commission they have to pay to IFAs and the like.
If you are not happy with the performance of AXA, you can transfer your pension into a self invested pension (sipp). There are many different types of sipp, but if you want to purchase commercial property, make sure you get the right type. Have a look on http://www.!!!!!!.uk/sipp-zone/ which will give more info to help with your decision.
Good luck!
BLB

Fishing_Simon

So I am allowed to transfer into another companies product then? And are there many penalties to do that?

dunstonh

So I am allowed to transfer into another companies product then?

yes.

And are there many penalties to do that?

depends on your current contract terms (ask axa for current value and transfer value - that will tell you if there is a penalty).