Permitted Investment Choices

Since 6 April 2006, it’s no longer to be compulsory to buy an annuity with your pension fund at the age of 75. You can now take an income from their pension, buy an annuity or take a new option called an Alternatively Secured Pension, which may enable you to pass pension assets onto your family when you die.

Unquoted Shares

Pension funds may invest in unquoted shares, but this does not allow directors of private firms to use their pension funds to buy shares in their own firms. If a fund invests in unquoted shares in a company that a pension member (or even their family) owns 50% or more of, the pension member will be liable for a tax penalty of up to 60%.

Property Investments

You can also include commercial property in certain types of pension plans. SIPPs (self-invested personal pension) allows you to borrow up to 50% of the value of your pension fund to finance the purchase. However, residential properties are not permitted in the range of investments.

Anyone who holds a prohibited asset in their pension will be subject to an income tax charge of 45%.