TRUST YOUR FRIENDS
Do you trust your mates? OK that might be a tricky question for some of you! But the good news is that you don't really need to. The fact is, friends are increasingly joining forces to get more from their pensions – and the issue of trust doesn't need to come into it.
We are talking about self-invested personal pension funds (SIPPs), a rapidly growing but still often misunderstood concept within the world of pensions that can be used to easily and legitimately invest in a wide range of commercial ventures.
Commercial property is one of the most common investments but they can just as easily be used to invest in anything from hotels to forestry plantations to fish farms to unlisted shares in companies.
Such investments have major benefits. Holding a tangible asset in a SIPP generates clear revenue streams that directly boost the overall value of a pension. That has a lot of appeal to people.
Pension funds can also borrow up to 50% of their total asset value. Using this cash, assets, such as commercial office premises, can be acquired directly by pension funds.
The problem that individuals may find, however, is that their pension pot is simply not big enough to be able to invest on the scale they might like.
By pooling your resources with your mates or colleagues you can better diversify your pension investments and even take on bigger and more lucrative investments.
These work by using a group SIPP arrangement where each participant can own a different percentage of the fund.
Such deals are easy to set up and exist within a robust legal framework that protects you and your pension. Good advice from professionals is critical. But if done correctly, a little innovation can reap substantial rewards.