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NU reveals planning gap

Norwich Union is warning company owners and directors they could be losing

out if they continue to keep their pension and business planning separate.

Research from NU shows that while the majority of owners and directors of

small to medium-sized companies have made provision for their retirement,

only 1 per cent have done so through a director pension arrangement.

NU says IFAs should offer this service to clients as the arrangement has

the added benefit over personal pensions of providing a means of raising

funds for the business as well as investing for retirement.

The research reveals a gap in the market where busi ness premises are

concerned. It shows 48 per cent of respondents either owned business

premises outright or through a mortgage or loan while 49 per cent leased.

Pensions marketing manager Iain Oliver says these purchases could be

financed more efficiently if the premises were bought through a director&#39s

pension scheme.

He says if the pension scheme buys the business premises, it can lease the

premises back to the company. Any rent paid by the company must be invested

back into the pension, reducing the corporation tax liability while at the

same time boosting the value of the pension.

If the company already owns the premises, it can sell it back to the

pension fund, releasing capital.

If the business experiences difficulties, the premises would be protected

from any creditors because they are an asset of the pension scheme and not

of the business.

Oliver says: “By integrating clients&#39 pension and business financial

planning, IFAs can help them increase their pension provision and provide

greater tax efficiency and protection for the business.”


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