Feature
Pensions & Employee Benefits
Does your pension work for you?
As a wealth management consultant at Mattioli Woods I have had the pleasure of working with, and being introduced to, many business owners and entrepreneurs. In my experience, such individuals share a common trait - their undying self-belief, not only in themselves but also their business. They work tirelessly looking for new ways to develop and grow their business. In general, such individuals have
By Michael Hulse, chartered financial planner at Mattioli Woods Investments are restricted to the
insurance company’s own offering and, until relatively recently, there has always been a requirement to buy an annuity that is a guaranteed income, which potentially provides no succession planning for future generations. Over recent years there have
not always been great advocates of pension planning. Principally, their impression of pensions are that of an insurance company that invests their funds in stocks and shares that they do not control or have any influence over. In most cases, entrepreneurs and
business owners would rather invest in themselves - identifying and seeking the greatest returns from their business.
been more changes to pension legislation than I care to list, but now pensions are firmly on many individuals’ radars. Not just as a means of saving for retirement, but also because of the additional benefits that the right pension scheme can provide as a business tool. I am referring to self-invested pensions, the domain of SIPPs (self-invested personal pensions) and SSASs (small self-administered schemes). These fully bespoke
arrangements offer complete investment freedom (subject to
HMRC rules), but also the ability to pass on pension saving to future generations to create what is, in effect, a succession planning tool. One of the principal areas a self-
invested pension can support a business is through the acquisition of commercial property. Consider a business that rents its
premises. How much cash leakage is there paying rent which is, in effect, dead money? A self- invested pension can acquire commercial property and the tenant would pay a commercial rent, which would be received tax- free by the pension scheme. The rent would reduce the company’s corporation tax liability, thereby providing additional taxation savings. Contributions can be made to
the pension scheme in order to boost the available funds, which again will qualify for corporation tax relief. However, consider a not
54 CHAMBERLINK March 2018
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