Most people will use investment funds provided by financial services companies. But some have been designed to be more flexible and have the powers of self directed investment*.
Self Directed Investment (SDI)
The ability of a scheme to :-
- Invest in commercial property - e.g. buy a factory, then rent it to the company, (funnels tax-deductible rent into the pension fund).
- Invest in shares
- Make loans
- Borrow - up to 50% of net asset value, and security is not required. (Not required by law. In practice lenders usually require security for any serious borrowing).
These SDI schemes are typically designed for those who own/run their own business or professional practice.
They are VERY powerful as financial planning tools, but abuse is dangerous and should be avoided. In general any transaction that involves those directly involved with the business AND the pension scheme needs to be very carefully assessed for legitimacy.
*Previously only available under a SIPP or SSAS
Last updated on April 06, 2012