View more on these topics

‘Equity release can boost pension pot’

A-day rule changes will enable investors to release equity from their home, then more than double it by investing in a pension, says Scottish Life.

The provider says most publicity surrounding simplification has focused on investing in residential property but investors can also take advantage of the new regime to release money from their property and place it in their pension.

It uses the example of a 50-year-old man planning to retire at 65, earning 100,000 a year and with 120,000 equity in his home.

If he releases 75,000 from his property to pay into his pension, it will be enhanced by basic tax relief to 96,153,85. As he is over 50, he can take 25 per cent tax-free cash immediately to reduce the loan.

The loan can then be further reduced by claiming the difference between basic and higher-rate tax relief through his self-assessment return.

Scottish Life calculates that for a real cost of 33,654.54, the individual in the example can put 72,115.39 in his pension fund. The solution also diversifies his portfolio away from residential property and into other asset classes.

Individual pension marketing manager Andy Taylor says: “If you look at some of the changes being introduced to pension plans and the fact that many people are already releasing equity from their homes to fund retirement, then I think we have a very interesting opportunity indeed.”

Hargreaves Lansdown head of pensions research Tom McPhail says: “The idea sounds plausible although you would have to make the client aware of the artificial constraints being placed on their finances. We will see an awful lot more of these industry solutions as there is a significant number of people approaching retirement with a great deal of wealth in property.”


8.5Bn Sipp cash to go into property

Sipp investors will pump 8.5bn into the residential property market from next April, boosting demand in the housing market by almost 5 per cent. Research by Hargreaves Lansdown indicates that a further 1.5bn will be used to buy overseas property.

Threadneedle chief in move to Henderson

Henderson has poached former head of UK equities at Threadneedle Graham Kitchen to head its thema- tic team. Kitchen has been tasked with improving equity performance at Threadneedle for the past nine months. At Henderson, he will report to head of equities Andrew Formica who has been with the firm for 10 months. Kitchen also […]

Openwork-v-Home of Choice trial set for November 22

The date for the court proceedings instrigated by Openwork against Home of Choice has how been set for November 22.The earlier separate proceedings brought against Richard Coulson will also be heard at the same date, to assess whether he was still a Zurich employee when he set up Home of Choice.Openwork ceo Stephen Leaman says: […]

Swip opening its property fund to smaller investors

Scottish Widows Investment Partnership has reduced the minimum investment in its property unit trust from 100,000 to 5,000. Demand for commercial property investment continues to be strong. The move aims to open the fund to the wider retail market following its launch in November 2004. The Swip property trust has been marketed through Lloyds TSB’s […]


News and expert analysis straight to your inbox

Sign up


    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