Some people have some odd ideas about pensions, here are a few:
Auto Enrolment Pensions
Our company doesn’t need an auto enrolment pension as we already have pensions and would just opt out! not true every employer needs an auto enrolment pension and you can not opt out before you have joined.
One Person companies are not subject to Auto Enrolment however, if the company takes on a second worker and the director and new employee have contracts of employment then both could become workers under auto enrolment.
Pensions aren’t as good as buy to let property
Property is a good investment and Buy to Let property has benefited from excellent capital growth, pension schemes can’t invest in residential property but they can invest in
- Industrial units
- Offices and shops
- Farmland and forestry
- Public houses
- Nursing homes
- Hotels
- Marine berth
Pensions are the most tax efficient way to invest because:
- You or your company will get tax relief on money paid in (for higher rate taxpayer that’s 40% tax relief)
- Pension schemes don’t pay income tax or capital gains tax
- When you are over 55 you can have 25% tax free
- Pensions are generally outside of the scope of Inheritance Tax
The Pension dies with me
It doesn’t have to die with you, in fact many people are now creating family pension schemes
The potential benefits of the Family Pension Trust are:
- Members, including minors, can pool funds together to benefit from a wider range of investment opportunities
- Multiple common investment funds allow a variety of bespoke portfolios to be established for some or all members, which widens investment options and can reduce costs
- Investment decisions do not have to be unanimous
- Different attitudes to risk can be catered for
- No minimum fund requirement
- Increased borrowing potential
- Succession planning options and death benefits
- Comprehensive, flexible options to enable retirement income to be phased
