Pensions Simplification

Investment rules and Pensioneer trustees.

Any investment entered into 6 April 2006 will not be affected by the new rules. Registered pension schemes can invest in all types of investments, including residential property but in this instance only without a tax charge if arranged though a property syndicate.

tell me more about residential property syndicates

Investment in residential property that is incidental to the main investment, e.g. a commercially used shop with a flat over it, will not however be classed as a residential investment.

Loans to scheme members are not allowed. There is a limit on holding shares in a sponsoring employer of 5 % of fund value. There is a borrowing limit of 50 % of scheme assets when the loan is effected.

Loans to employers from an employer sponsored scheme must:

• Have an interest rate at least base rate plus 1 %.
• Not last for more than 5 years.
• Be secured as a first charge on assets that remain of at least equal value to the loan.
• Not be more than 50% of the fund value at the date the loan is taken.
• Be repaid either by equal annual installments.

It is no longer an Inland Revenue requirement to have a pensioneer trustee for a Small self administered scheme.

take me to HMRC guidance on permitted investments

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