View more on these topics

Alert over pension loan schemes

IFAs and pension experts have warned investors to be wary of “complex” schemes which exploit a loophole in regulations to allow people with a pension pot of £20,000 or more to borrow up to 50 per cent of the value before age 55.

The schemes, called pension reciprocation plans, are being promoted by Premier Pension Solutions.

They allow people to borrow up to half the value of their fund by placing investors’ money into a master pension plan, which is an occupational scheme with less than 100 members.

Each MPP can issue loans to members of a different master pension scheme, sidestepping regulations which prevent individuals taking a loan from their own scheme.

The schemes typically invest around half of a member’s fund in a non-tradable fixed-interest security, with the remaining 50 per cent invested in ECH investments, a property investment vehicle based in the British Virgin Islands.

Investors must repay any loan taken plus annual interest of 5 per cent above the Bank of England base rate. There are also initial fees of 5 per cent plus an annual charge of 1 per cent.

Standard Life head of pensions policy John Lawson says: “These schemes are extremely complex. I would suggest that 50 per cent speculative property investment and 50 per cent in a non-tradable fixed-interest security is not an appropriate diversification for an occupational pension scheme.”

Hargreaves Lansdown pensions analyst Laith Khalaf says: “This scheme is clearly very costly and extremely risky too.”

Premier Pensions Solutions says the schemes are registered with HMRC and the Pensions Regulator and operate within Government rules.


News and expert analysis straight to your inbox

Sign up


There are 6 comments at the moment, we would love to hear your opinion too.

  1. Concerned IFA 12th May 2011 at 8:55 pm

    John Lawton of Standard Life makes understatement of the year. You have an interest in a second hand pension loan from someone you don’t know and via a scheme whose funding position is completely unknown to you AND 50% in an unregulated BVI Property Company? How desparately do you need to access 50% of your pension fund?

  2. More evidence that Premier Pensions Solutions are in it for themselves

  3. Is this not an Associated Operation?

  4. Standard Life or any bank stating that a scheme is complex is amazing considering that they all run with derivatives, hedge funds etc etc.

  5. I have a company uk pension valued at 150K. How can I borrow 75K.

  6. Very Nice Post!!!

    get Best loan Apply
    Call 9878981166

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm