Permitted Investment Choices for Pensions

Since 6 April 2006, it is no longer 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 (ASP), which may enable you to pass pension assets onto your family when you die. Pension schemes are also allowed a much wider choice of investments, although it's a good idea to get specialist advice if you're interested in developing your own pension in this way.

Property Investments

You may include commercial property in certain types of pension plans; SIPPs (self-invested personal pension) enable 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, and anyone who holds a prohibited asset in their pension will be subject to an income tax charge of 40%.

Unquoted Shares

Pension funds may invest in unquoted shares; however, 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 their family) owns 50% or more of, the pension member will be liable for a tax penalty of up to 55%.