Top 5 Reasons to Invest your Pension in

Gareth Bertram of John Charles Personal Finance explains

Although many people are unaware of it, there are alternatives to the traditional stock market-linked pension fund. By investing in a self-invested personal pension (SIPP) you can take control of your pension yourself and invest in a variety of different asset classes.

Perhaps because many investors are already familiar and comfortable with it, one popular option is property. Of course, this will not be right for everyone and, as with any investment, there are risks attached, but there are also a number of potential advantages to investing in property via a SIPP as opposed to using a traditional pension fund.

Here are our top 5 reasons for investing your pension in property:

1.       Alternative to volatile and underperforming stock markets

The performance of traditional pension funds is often strongly linked to that of stock markets. Unfortunately, in recent years stock markets have performed poorly and annuity rates are at historic lows. By investing your pension in property, you can avoid volatile equity markets and find an alternative source of growth and income.

2.       Avoid hefty pension fund fees

Many pension funds charge significant fees for managing your investments, even when they perform poorly, thereby reducing the value of your pension pot further. And if you invested via an independent financial advisor (IFA) you may also still be paying commission to them. By taking control of your pension yourself via a SIPP, and investing it in property, you can avoid these fees and make more of your pension pot.

3.       Income and growth

By investing your pension in property, not only could you achieve capital growth on your investment, you could also collect a regular income from a tenant. What's more, if this rental income is enough for you to live off in retirement, you could potentially enjoy further capital growth from your investment even after you retire.

4.       No need for an annuity

With annuity rates at historic lows of around 4% (meaning a pension fund of £100,000 would provide a weekly income of under £77), this traditional option for retirees is looking increasingly unattractive. What's more, when you buy an annuity, you give up any further growth from your pension. By investing in property with a rental income on the other hand, you have the opportunity to enjoy a regular income and still grow your capital.

5.       Boost the power of your pension by up to 50%

If you invest your pension in property you could also take out a mortgage of up to 50%, thereby boosting the investment potential of your pension pot. And by renting out the property, you could effectively get someone else to pay off the mortgage while you enjoy the potential capital growth.

To find out more about investing your pension in property, and receive a free personalised pension report, please complete the form on the right.

Disclaimer: Anyone viewing this should not accept any information contained as an inducement or offer to invest in any of the products displayed or inferred, nor should it be construed as tax or legal advice. John Charles Personal Finance is not regulated by the FSA and is not authorised to offer advice to the general public concerning any regulated or unregulated investment. Browsers should seek advice from an independent financial advisor and/or tax advice on all information included in this web site prior to making any property or land investment decision. The value of your property investment may fall or rise depending on market conditions and any other factors. We offer no guarantee as to future performance in respect of income or capital growth. This is not an offer to participate in a collective investment. John Charles Personal Finance make no recommendation on any of the properties information is provided upon. John Charles Personal Finance do not provide any advice on SIPPs. We will introduce all interested clients to an authorised FSA firm for this purpose. John Charles Personal Finance acts as a promoter and / or introducer for third parties.