Self-Administered Pensions Offer Alternative Investments to Traditional Pension Funds

Investing in property is an excellent way of diversifying your pension investments – but not property abroad – property right here at home, in Ireland. Most Irish pension companies do not offer property funds and if they do, they are generally abroad or in a pool of properties. This makes it difficult for the investor to be clear on exactly where their money is invested. There are many options for the individual who wishes to invest their pension or part of their pension in to property. A self-administered pension is a solution that enables an individual to have flexibility of investment in various assets with transparency of fees.

Using Self-Administered Pensions to Diversify in Properties

With a self-administered pension you can invest in a single property or a syndicated property. In a single property you can invest in either a commercial or a residential property and you can pick the property, select the renter and also collect the rent. Of course all the rent collected is tax free. In a syndicated property you can also invest in either a commercial or a residential property but it allows you to invest in a bigger property with other pension or non-pension investors. The structure is usually a limited partnership with several investors. This will allow you to invest in a large property within your pension portfolio without having to invest a large sum of money. For example a commercial property selling for €1 million you can invest €100,000 and own 10% of the property. This gives your pension portfolio exposure to a commercial property that may not have been possible previously. One of our clients recently invested €50,000 in to a syndicated commercial property leaving him €200,000 to divide between 4 other properties.

As Ireland has recovered from the financial crises we are now moving into the expansion phase in a business cycle. Sole traders, executives and directors are looking to save tax on their income. A self-administered pension gives them not only tax relief but greater diversification on their investments, which in turn lowers their risk.