Pension options + property

[peemac]

A general query - I'm meeting pensions advisor this week to look at some options and would love a little input/opinion.

Current pensions (mix between buy out bonds and current scheme) have a value of circa €340k. Split 50/50 into Zurich Prisma 4 & 5.

I now have a SSAP set up. It was set up to look at purchasing a specific property, but with IORPs rules, this did not proceed, so its sitting idle at present with zero assets.

I'm also Potentially adding 40-50k a year to the pension for the next few years.


So would cashing some / all of the prisma funds and looking at other investments via the SSAP be something I should look at now?
and a second question, can a pension jointly purchase a commercial property with another pension eg Peemac pension and johndoe pension buy property jointly?

Thanks

 

[Brendan Burgess]

I don't think you can buy a property jointly. But even if you could, I would advise against it. Any return on your investment would be swallowed by trustee fees and legal fees.

Brendan

 

[Dave Vanian]

Any return on your investment would be swallowed by trustee fees and legal fees.

Hi Brendan,

@peemac already has the SSAP set up and so is aware of what the trustee fees they're currently paying to whatever trustee they're using. And yes, legal fees and costs are incurred in buying any property, inside or outside a property. But I think that it's a bit of an exaggeration to say that "any return on your investment would be swallowed by trustee fees and legal fees."

That said, I advise people to diversify and not to be over-exposed to a single asset in a single asset class in a single place. IORPS 2 has made this law, but only for Occupational Pension Schemes, not PRSAs, Buy Out Bonds, ARFs etc.

can a pension jointly purchase a commercial property with another pension eg Peemac pension and johndoe pension buy property jointly?

Yes. Like any purchase of any investment with another person, make sure that there's a clear written agreement in place that covers off possible points of conflict, e.g. one person wants to sell but the other doesn't etc. Most of the bigger trustee firms would have draft agreements available for convenience, but you'd still need to get your own legal advice about it. (Yes Brendan, this will cost money but I still think that your statement exaggerates the cost of the professional advice.)