Transfering Fire brigade pension to buy a property

makki1

Hello All,

I have just joined the site and forum and was wondering if anyone could help me with my research. I am a serving fire fighter and am thinking of transferring my pension fund into a property. I am led to believe that we can only transfer this into a commercial property.
I do not know how true this is as information is very sketchy at present, hence me getting information from as many good sources as possible.
What I would like to know is this.

1. Can I transfer my pension into a property and if so would this only be a commercial property which I could not live in?

2. Does the word commercial mean that this has to be a shop dwelling?

3. If not would this then mean I could transfer the money into a by to let property renting it out under a business?

4. Would I be able to transfer my funds to purchase more than one property.

I will be seeking further professional advice, but the company who look after the brigade pension have told me the charge for advice is 700 pounds so I am looking for a cheaper way to collate the information.

Thanks in advance for any advice and thanks for taking time to read my post

Makki

Lokolo

You cannot buy residential property through a pension, so yes only commercial property.

Hwever:

1) It's unlikely anyone would sign off the pension transfer, and you'd be very foolish to do so.

2) Doesn't have to be a shop, but it has to be commercial of some sort.

3) No

4) Of course...

But it goes back to 1), you'd be very silly to transfer out of a defined benefit scheme to put into one asset type. If I were you, I'd stop thinking about what you are planning on doing.

Drp8713

As above really.

Dont do it. Silly idea.

You might have enough of a lump sum from your FB Pension to buy a small BTL somewhere out right when you retire, and still have a regular income coming in from the pension.

atush

First of all, you cant transfer your pension to buy residential property. Which is great, as it would be a terrible thing to do.

Second, you have a GREAT FS pension. To transfer it ANYWHERE would be huge mistake. But, you would need an IFA to sign off on it, and most would not. Because ot is 99% of the time a very bad thing to do. If you are ill/have health problems and not likely to make old bones, or have no spouse or dependants and want to retire early, you might fall into the 1%- or not.

Thrid, forget about commercial property. While you can invest in this within a pension, it isn't easy or cheap. And you can only invest up to 50% of your pension in that asset class. Mostly, you clearly don't understand commercial property from what you have asked, so would probably not be wise to look at investing.

Some of the best commercial property to invest in within a pension, is the premises of your own business as you would have to pay rent anyway- so why not pay rent to your pension.

Something to think of for the future if you leave the FS.

But you have a fantastic pension- even with the changes. So please don't tinker with it. Save outside of it for BTL investments.

makki1

Thanks for your quick response Lokolo.

In regard to being silly, I am far from being silly but looking out for my best interest. I cannot say too much about what is going on regarding our pensions but its not good news.

Also please explain, you say I cannot purchase a buy to let but I can purchase more than one property with the funds.

Lokolo

makki1 wrote: »

Thanks for your quick response Lokolo.

In regard to being silly, I am far from being silly but looking out for my best interest. I cannot say too much about what is going on regarding our pensions but its not good news.

Also please explain, you say I cannot purchase a buy to let but I can purchase more than one property with the funds.

Correct. One of the other posters had a little analogy for defined benefit schemes and changes.

You start with them being gold plated, but due to the fact they are unsustainable (because they are so generous), the benefits are usually reduced. But they are still silver plated! Better than 99% of defined contribution schemes. For me to get the same benefits are you, I need to put around 25% of my salary contribution in.

And apologies, when I first read Buy to Let I was thinking of residential buy to let. Commercial property buy to let is fine yes.

Even with changes, you are unlikely to get the full benefit if you transferred it out. If you are worried, (and given you are a fireman and will want to retire earlier when you are in full health) you should be making additional contributions outside of your work pension. For example, you can open up a SIPP alongside the firemans scheme and you can use this money to invest in some commercial property (although personally I wouldn't put all money in property, eggs one basket and all that).

makki1

Ok everyone thanks for the advice. Just to let you know I have only got 13 years of service and I am thinking of leaving the service.

Maybe I should have explained that earlier so I apologise. If I do I will be waiting till I am 65 which is some time away before I get my pension. Therefore I would like my money to work better for me NOW than wait another 15 years.

If anyone has any advice or experience other than the previous helpful posts it would be appreciated.

Thanks again

hyubh

makki1 wrote: »

I have only got 13 years of service and I am thinking of leaving the service.

Maybe I should have explained that earlier so I apologise. If I do I will be waiting till I am 65

If you have 13 years service, then you will be in the 1992 scheme and so have a deferred pension age of 60 (it's 65 in the 2006 scheme).

Therefore I would like my money to work better for me NOW than wait another 15 years.

The transfer value will not reflect the full value of the pension, which if left deferred will also rise with inflation automatically.

atush

Ok. thinking of leaving the service.

Best thing to do is leave your FS pension to grow indexed (ie your FS will grow even after you leave) and have that as your base pension. Your 13 years will probably get your more at 60 than most other pensions. It wil be your pension safety net. It wont be frozen/fixed but will continue to grow each year with the index your scheme uses (ie CPI, RPI etc).

Then, when you start elsewhere have that work pension (if the employer pays in). This can always be transferred to a Sipp later to buy commercial property, but you don't want to miss the Free Money.

If you work for yourself, open a Sipp. When it grows large enough, then buy a commercial property, from a small business to a shop with flats over (if tied to the business) to a garage, bank building- whatever- even a row of garages I think. Then rent it out and take the rent as income into your pension.

If you prefer residential property, save into S&S isas until you have enough saved for 40% deposit (or less with a cash float if you find the right mtg).

If you have a spouse and or dependants, the other benefits tied to yoru pension such as Death in service/insurance are worth up to 30% of your salary. So to beat that, you'd have to save MORE than 30%.

xylophone

Any receiving scheme would require an IFA sign off and you might be hard put to find one who'd agree as transferring out of an FS pension scheme is rarely a good idea?

Presumably what you were considering was property investment within a SIPP as here http://www.jameshay.co.uk/DocumentView.aspx?DocumentID=87

magpiecottage

If you have 15 years' to 65 then you are 50.

As I recall, under the old scheme, firefighters could retire on an unreduced pension from 55 if they were in active membership to that time. If that is still the case it might just be worth gritting your teeth and holding out for it rather than waiting to 60 to get it.