Investing in a Commercial Property

Back in 2007 Rob had SIX different pension schemes as follows:-

	3 x Money Purchase Schemes (Prudential, Abbey Life and Allied Dunbar)
	1 x Contracted out SERPS plan (Prudential)
	2 x Final Salary Schemes (Royal London and Zurich)

The total value of these pension funds was £82,000 (which using average current annuity rates would provide an annual pension of £5000 at age 65)

Rob’s reasons for transferring to a SIPP:-

	Consolidation of funds – reduce the amount of paperwork
	Simplify Management – one contract rather than several
	Transparency – one easy-to-understand charging structure
	Control – wanted to choose where my money was invested
	Wanted to own specific asset initially (ie. Own commercial property)

Prior to the SIPP being set up, TailorMade commercial property was purchased ay £150,000 using commercial finance of £120,000.

Process

	As it was going to be a SIPP purchase, the property had to be independently valued.
	Value was £150,000.
	As Rob was one of 4 purchasers the investment from Rob’s SIPP needed to be £37,500.

Outcome:

	Rob’s SIPP now owns 25% of the property value.
	The commercial property is now debt free
	The £30,000 personal equity in the property was paid to the 4 partners (£7,500 each)

Because the Property is now owned by SIPPs:-

	Rental income generated from this property now goes into the SIPPs tax free
	If the property increases in value it will not be liable to capital gains tax

Investing in a Business

First Appointment Date: 31.05.2011

The clients are 44 and 45. They have 4 children and a joint income of approximately £120,000pa.

Unfortunately, their total expenditure exceeds their income, with little scope to improve the situation in the short term. They have the usual financial issues for example, no savings and too much debt, not having enough life assurance and critical illness cover, large retirement income shortfalls and the inability to re-mortgage because of lack of equity in their property etc, etc. However, he has £75,000 in a SIPP and she has £220,000 in a Skandia Personal Pension. All the monies are invested in reasonably performing, low charging funds, appropriate to their risk profile.

However, until this point they had little or no pension knowledge (or interest for that matter), they were very enthused when they learned what they could do with their pension funds. They were very receptive to the ‘full’ SIPP proposal and particularly liked the idea of taking control of their own investments, and therefore their own retirement destiny.

Outcome:
The clients can now buy into, and therefore share in the success of, the company for which he works. They’re going to invest £100,000, which he believes will either half in value over the next 5 years, or return 10 times the amount invested.

They have also invested in Green Oil, and Physical Gold, because the clients already understood the Australian government’s requirement for renewable energy and the current and future dynamics of Gold. Furthermore, they love the Harlequin concept and have invested there as they feel that it would really improve their chances of having enough income in retirement.

The clients are ecstatic that they are able to make their OWN investment decisions regarding their OWN pension funds, and especially to be able to invest in his company which simply would not have been possible to do until now. They feel that they’re now INVOLVED in their retirement planning and are finally doing something POSITIVE about it.