Savings accounts for pension fund cash

pas

There are lots of banks offering rates over 6% for savings accounts, however I can't find any that will offer this to a pension fund and pay the interest without deducting tax. Bank of Scotland pay only 4% tax free and Investec 4.98%.

I'd be pleased if anyone knows of better rates - ICICI and Icesave don't offer accounts to pension funds.

jem16

A savings account is not a pension fund.

You need to take organise a pension such as a stakeholder, personal pension or SIPP with either an insurance company or a funds supermarket.

Does your company(if you work) not offer a pension plan?

EdInvestor

Conventional pensions usually have a "building society" or money market account.However once you have deducted charges they are not competitive with saving directly into banks.

Pensions are designed for risk based investing, not for cash. You could use gilts or very high rated corporate bonds, but you would need to open a SIPP to get the safety aspect sorted, as investing in these securities via funds does not offer that.

dunstonh

Conventional pensions usually have a "building society" or money market account.However once you have deducted charges they are not competitive with saving directly into banks.

Typically the best ones are paying about 4.5% after charges. They are not designed for the purpose the OP has in mind though. So, it would be pointless using one for that.

you would need to open a SIPP to get the safety aspect sorted, as investing in these securities via funds does not offer that.

The thought of sending someone with that level of knowledge into the experienced investor tax wrapper is premature and potentially damaging.

What is needed here is a bit more information on what is trying to be achieved. i.e. why is cash account wanted? Does the op understand the problems of using cash accounts for long term provision? Does the op understand investing?

pas

Thanks for the replies.

The pension fund is a SSAS with just 2 members and I am the scheme adminstrator - the fund already has many varied investments (equities, bonds, funds etc., I've been an active investor for over 25 years) and commercial property. However there is also a cash element which returns 4.98%, tax free of course. I'm simply trying to find a better corporate account.

Debt_Free_Chick

pas wrote: »

Thanks for the replies.

The pension fund is a SSAS with just 2 members and I am the scheme adminstrator - the fund already has many varied investments (equities, bonds, funds etc., I've been an active investor for over 25 years) and commercial property. However there is also a cash element which returns 4.98%, tax free of course. I'm simply trying to find a better corporate account.

In which case, you need an "institutional" cash fund i.e. one that can be held by the Trustees, rather than an individual pension investor.

I assume the scheme has a bank account - can the bank not offer anything?

As an aside, though .... why do you want to hold cash?

pas

The account we have is held by the 2 trustees and yes we also have a current account - the bank is frequently trying to get hold of the cash fund but won't match the current rate of 4.98%. (from Investec Pension & Trust Reserve Account)

The reason for the cash is simply diversification - trying to spread the fund around and have a bit of it that isn't at risk. The scheme has been in place for a long time and we'll commence with income drawdown in a couple of years.

bigbloke45

If you've been the administrator of a SSAS and you've been an active investor for 25 years, what have you been doing?

EdInvestor

I'd have thought 4.98% tax free wasn't such a bad deal in the current climate

pas

What have I been doing you ask......... making it grow.

And 4.98% isn't so bad I know, but getting an extra 1% makes all the difference - in fact getting 6.7% and paying the tax would be better.

It's a shame that all these on-line banks with good rates don't make their accounts available to pension funds.

dunstonh

Have you access to any other institutional savings accounts? The rates on those are typically closer to 6.5%