Pension anathema

you are in your twenties, even thinking about pensions may be anathema to you. Wrong; a pension can be a vehicle to allow you to retire early and give you the freedom from work you really want. Take full advantage of your employer’s pension scheme, even if you are required to match the contribution made by the employer. The build up of a substantial pension refund requires the long-term compounding effect of gains. By putting off investment into a pension fund, the reality is that you may never be able to invest enough to recover the lost ground.

Risky is an accurate description many people would use who have invested in pension funds and suffered the damaging effects of financial scandals. Today it is possible to create your pension fund in the UK in the form of a SIPP, a Self Invested Personal Pension. It is effectively an inexpensive ‘wrapper’ in which to put your own investments. Up to the annual contribution limit which is age related, you benefit from tax relief at your highest level and a pension can be drawn from the age of 50, although the minimum age may be increased.

If you own a company, a SIPP can be used to buy business premises. The money in the fund can be used to purchase a property, which must not be already owned by you, the company or other shareholders, or the SIPP can borrow up to 75% of the property value. The company must pay a commercial rent to the SIPP and the sale of the property is free of capital gains tax in the fund.