pension loans

[addrecruit]

Hi, I wondered if anyone could advise on whether pension loans exist and are they a bonafide way of raising finance. I am not talking about borrowing through a ssas pension, I have seen several internet sites offering to lend up to 50% of a funds value with repayment due on retirement.

I have a frozen public sector pension which although it has a guaranteed future value I won't be able to access it for another 15 years (age 60). I have applied for an up to date value of the fund but believe it is somewhere between £49k-£55k.

My question isn't the prudence of touching it but purely whether there is a mechanism to release cash via a loan. The fact that few of the websites appear to have a UK phone perhaps speaks volumes but it is a very attractive idea at the moment!

Any input would be most welcome

 

[PensionLoans]

addrecruit, the simple answer is yes it can be done. It is more difficult with a a public sector pension but it still can be done. You are also right to be careful, only choose a company with a UK telephone number.

 

[addrecruit]

OK thanks, is it something you do or are you able to point me in the direction of someone that may be able to assist?
thanks

 

[PensionLoans]

Yes it is - I'm not sure if i am allowed to post contact details on here though........ will try anyway..... our site is called pensionbackedloansuk.co.uk have a look. Look forward to speaking.

 

[assetharbour]

More than one way to skin this cat, addrecruit.

A cash advance driven by the value of your pension fund alone, requiring no other form of supporting security ( for example, 1st or 2nd charges over residential or investment property ), nor one burdened by an annual interest charge or capital repayment structure has been legally possible since The Finance Act 2004 was passed. More importantly, a readily accessible and easy to understand financial instrument has existed since the rump end of last year to make this a straightforward, typically 8 to 12 week process from enquiry to receipt of funds into your bank account. Asset Harbour is the primary UK based distributor of this innovative loan facility.

Like PensionLoans above, I'm new to this forum, but eagerly looking forward to participating in lots of future discussions on both this specific scheme as well as business finance in general as my background is very broadly based in commercial fund raising. I am not, to be honest, sure what I can and cannot say in terms of self promotion on here, but I would be more than happy to talk through your options and supply an easy to understand pdf guide to using The Pension Reciprocation Plan to raise funds if required.

Best regards

Geoff

 

[internetspaceships]

What both these guys have failed to ask is your circumstances.

If you have a Limited Company or are self employed their are other options too.

Go see a good IFA who specialises in corporate schemes and see what you can do.

Not a "pension loan scheme" person who pops up on the forum after googling your thread

 

[assetharbour]

Fair point although slightly assumptive that I wouldn't take the trouble to explore with any prospective client what their circumstances might be before taking them down any specific fund raising route, whether I have just "popped up" on this forum or not. My response was a genuine answer to the poster's question.

I do, however, appreciate that credibility has to be earnt for any newbie and hopefully with future contributions to the forum, I will not be seen as a speculative, predatory visitor to UKBF but as someone who can add some value. We all have to start somewhere and all that....

Best regards

 

[lubyanka]

i am contributing to an nhs final salary pension scheme (30 years paid in so far), would i be eligible for a pension loan, or would there be too much to lose in the long run..

 

[dannidogg]

Yes it is - I'm not sure if i am allowed to post contact details on here though........ will try anyway..... our site is called pensionbackedloansuk.co.uk have a look. Look forward to speaking.

These pension loan companies are all smoke and mirrors they will take your £295 so called admin fee tell you it will be 6 to b weeks then have the brass to get you running around for them and after 6 weeks give you some long worded long winded guff about other products available.
Dont trust them i wont mention names but we know who they are
just be careful....

 

[dannidogg]

would you like to tell me which company to do business with?

 

[Nelson01]

Understanding the whole concept of income tax is a difficult thing but with the help of such websites it becomes a bit easy to understand this complex issues and that to with so creative things this will really make the understanding more pleasant.

 

[brianjohns]

With my regulators hat on you must avoid any schemes that pay out more than 10% as they take funds from your pension scheme. While you may not have a problem with this HMRC does! Any 50% scheme will ultimately attract a 70% penalty from the tax man, which is something that they will not tell you about up front. Only use a pension loan company that continues to invest your money sensibly with a blue chip investment provider, and that funds your pension loan from a private source, not by withdrawing assets (trust busting) from your pension.

Just picking up on a previous comment......overseas numbers need not be sinister. Pension loan companies are all unregulated whether they are based in the UK or offshore - the FSA does not recognise these scheme at all. Offshore providers are established not to circumvent FSA regs but to take advantage preferential commission structures which will be closed in the UK once the RDR kicks in in 2013.

 

[SeanJones47]

The FSA has already acted on these so called 'Pension Loans' and declared them illegal. The only CURRENT way of releasing money via a loan is through a Small Self Administered Scheme (SSAS). These are considered Occupational Schemes and will require some security. However, they do allow you to loan up to 50% of the value of your pension fund for up to five years, and at a rate 1.5% above the Bank of England Rate. This means that you will pay far less than borrowing from a bank, but you will still have to pay it back.

Don't forget, although the pension is in your name, you don't own it - it is held in trust for you until you retire. Any money you take from the Pension illegally, or agianst CURRENT HMRC rules will attract a 55% tax charge against YOU. However, these companies will be long gone by the time you are called to account by HMRC, so you will end up footing the bill.........for a legitimate way google SSAS, or if you are in Warwick look up Rossmore Financial & I'll be happy to point you in the right direction.

 

[doi_swilkinson]

Fed-up with your Pension provider?
Your situation is probably like mine. You’ve put
hard earned savings into a standard pension fund.
As a former civil servant, I had funds in a
government pension pot. I had some other funds in
an old employer’s occupational pension scheme and
I had a small personal pension product.
All that adds up to a nice pot of money. But it wasn’t
making me rich. I couldn’t actually spend it on
anything useful. And I had no control over how it
was invested. There were investments I wanted to
make in property but I couldn’t use my pension pot
for that either.
I was well-off on paper. But in the real world, all
that pension money might as well not exist.

No income tax
& no investment
restrictions
No age
restrictions
Your fund free
for you to use
typically within
12 weeks.
£249 Admin Fee
to become a
member.

Please contact me if this may be of interest to you all,beats pension loans hands down

Regards

Stefan

 

[jonty502]

The FSA has already acted on these so called 'Pension Loans' and declared them illegal. The only CURRENT way of releasing money via a loan is through a Small Self Administered Scheme (SSAS). These are considered Occupational Schemes and will require some security. However, they do allow you to loan up to 50% of the value of your pension fund for up to five years, and at a rate 1.5% above the Bank of England Rate. This means that you will pay far less than borrowing from a bank, but you will still have to pay it back.

Don't forget, although the pension is in your name, you don't own it - it is held in trust for you until you retire. Any money you take from the Pension illegally, or agianst CURRENT HMRC rules will attract a 55% tax charge against YOU. However, these companies will be long gone by the time you are called to account by HMRC, so you will end up footing the bill.........for a legitimate way google SSAS, or if you are in Warwick look up Rossmore Financial & I'll be happy to point you in the right direction.

My only comment to the above whilst mostly accurate is the low interest rate of the loan return. Surely good advice would dictate a return of circa 5 to 8% to match any original growth enjoyed within the previous investment portfolio.

 

[Disillusioned0107]

I small question but one that is particularly important to me. A loan to a sponsoring employer from a SSAS requires the loan to be secured on an asset. Most articles I can find require the asset to be something of value, such as property, machinery etc. Would a general debenture on a company, based on a profit forecast (NOT on any specific assets) be a suitable security?

 

[Scalloway]

The words to note here are "something of value" which in this context I would say is something that could be sold if the deal didn't work out. You can't sell a profit forecast.