Pensions - can I do this?

[CAPP0]

I'm mid-50s and have 5 pensions from across my working life so far.

One of these has a pot value of c. £150k and a projected pension of a massive £4.5k pa.

Without going into the pitfalls and extra costs etc etc (at this point - be good to have that discussion later), what I want to know is, in principle could I move that £150k to a SIPP and use it to buy rental property? If so, (a) can I do that now, ie, buy the property/ies and (b) if yes, then what happens to the income whilst I'm still under retirement age? Rationale here being that I believe, based on experience of close friends, that I can approximately treble the return on my £150k, albeit with many caveats, and still have access to the capital in the future if required (via sale of property).

I do plan to ask a pension advisor to review my full overall pension situ but this question is a fundamental one for me.

Thanks.

[Badda]

CAPP0 said:

I'm mid-50s and have 5 pensions from across my working life so far.

One of these has a pot value of c. £150k and a projected pension of a massive £4.5k pa.

Without going into the pitfalls and extra costs etc etc (at this point - be good to have that discussion later), what I want to know is, in principle could I move that £150k to a SIPP and use it to buy rental property? If so, (a) can I do that now, ie, buy the property/ies and (b) if yes, then what happens to the income whilst I'm still under retirement age? Rationale here being that I believe, based on experience of close friends, that I can approximately treble the return on my £150k, albeit with many caveats, and still have access to the capital in the future if required (via sale of property).

I do plan to ask a pension advisor to review my full overall pension situ but this question is a fundamental one for me.

Thanks.

Yes but not resi properties.

[CAPP0]

Hmm, I don't really want to go into commercial. What's the thinking behind no resi then?

[Badda]

CAPP0 said:

Hmm, I don't really want to go into commercial. What's the thinking behind no resi then?

I assume it was to try and prevent a surge in house prices as demand ramped up massively with everyone investing.

[sidicks]

CAPP0 said:

I'm mid-50s and have 5 pensions from across my working life so far.

One of these has a pot value of c. £150k and a projected pension of a massive £4.5k pa.

Without going into the pitfalls and extra costs etc etc (at this point - be good to have that discussion later), what I want to know is, in principle could I move that £150k to a SIPP and use it to buy rental property? If so, (a) can I do that now, ie, buy the property/ies and (b) if yes, then what happens to the income whilst I'm still under retirement age? Rationale here being that I believe, based on experience of close friends, that I can approximately treble the return on my £150k, albeit with many caveats, and still have access to the capital in the future if required (via sale of property).

I do plan to ask a pension advisor to review my full overall pension situ but this question is a fundamental one for me.

Thanks.

Not directly related to the question you asked, but be aware that:

1) I suspect your quoted annuity increases with inflation - that can be substantial over time and is something sometimes overlooked

2) at retirement you do not have to take an annuity, but most importantly, if you do want an annuity, you have the opportunity to take out your annuity with the most competitive provider, so you might achieve a much higher rate than that quoted.

As highlighted, you can hold property within a SIPP, but not residential property.

[red_slr]

CAPP0 said:

Rationale here being that I believe, based on experience of close friends, that I can approximately treble the return on my £150k
.

Urm... yeah maybe but over what time frame are we talking about!

[Yipper]

Shares always outperform property longterm.

[CAPP0]

sidicks said:

CAPP0 said:

I'm mid-50s and have 5 pensions from across my working life so far.

One of these has a pot value of c. £150k and a projected pension of a massive £4.5k pa.

Without going into the pitfalls and extra costs etc etc (at this point - be good to have that discussion later), what I want to know is, in principle could I move that £150k to a SIPP and use it to buy rental property? If so, (a) can I do that now, ie, buy the property/ies and (b) if yes, then what happens to the income whilst I'm still under retirement age? Rationale here being that I believe, based on experience of close friends, that I can approximately treble the return on my £150k, albeit with many caveats, and still have access to the capital in the future if required (via sale of property).

I do plan to ask a pension advisor to review my full overall pension situ but this question is a fundamental one for me.

Thanks.

Not directly related to the question you asked, but be aware that:

1) I suspect your quoted annuity increases with inflation - that can be substantial over time and is something sometimes overlooked

2) at retirement you do not have to take an annuity, but most importantly, if you do want an annuity, you have the opportunity to take out your annuity with the most competitive provider, so you might achieve a much higher rate than that quoted.

As highlighted, you can hold property within a SIPP, but not residential property.

Odd, one of my replies is missing. I was saying, at retirement age if I draw down the pot (and pay the tax) then I guess it's mine to do with what I will, including resi property?

[sidicks]

CAPP0 said:

Odd, one of my replies is missing. I was saying, at retirement age if I draw down the pot (and pay the tax) then I guess it's mine to do with what I will, including resi property?

I believe you can take a certain amount tax free and then pay tax on the remainder but if you want a definitive answer, PurpleMoonlight is probably the best person to ask.

[PurpleMoonlight]

sidicks said:

CAPP0 said:

Odd, one of my replies is missing. I was saying, at retirement age if I draw down the pot (and pay the tax) then I guess it's mine to do with what I will, including resi property?

I believe you can take a certain amount tax free and then pay tax on the remainder but if you want a definitive answer, PurpleMoonlight is probably the best person to ask.

A compliment, thank you.

Yes you can do that, but to mitigate the tax you may wish to spread the taxable pension element over a few tax years. Taking the pension will also severely restrict any ongoing pension contributions you can make/receive. Also don't forget the pension arangement is outside your estate for IHT, whereas a BTL would be inside.

Because of the size of the transfer value, you must seek independent financial advice before proceeding with the transfer. They will likely charge for that.

[BoRED S2upid]

CAPP0 said:

Hmm, I don't really want to go into commercial. What's the thinking behind no resi then?

What about a bit of both? Commercial on ground floor resi above? Is that an option?

[PurpleMoonlight]

BoRED S2upid said:

What about a bit of both? Commercial on ground floor resi above? Is that an option?

Only in very limited circumstances.

[CAPP0]

Thanks for the input chaps. It's certainly my intention to seek proper advice, I just wanted to know whether I'm p***ing in the wind or not before I set that meeting up!

[Jockman]

Residential land is an option. All the way up to planning stage.

[RL17]

You need to get advice as the transfer value over £30k (plus possibly smaller ones if has/have other benefits (like higher annuity rates guaranteed)).

Adviser may charge a proportion/% of funds transferred. So moving smaller pensions first might be a cheaper option.

Smaller pots can be transferred without advice - so could do this and withdraw 25% tax free at 55 - would need to be able to invest in SIPP with balance subject to limitations (e.g share or funds or commercial property) and/or withdraw gradually and pay tax on it.