The simple answer is yes. Many people prefer to avoid the government pension crisis in the UK and build themselves their own pension fund, using a property portfolio to produce sufficient yields for their retirement instead. Many use a Self Invested Personal Pension (SIPP) as their prime strategy for investing in property that will bring them the return they need for their retirement years. SIPPs are UK government approved and, as such, come under the legislation of the HM Revenue and Customs Department (HMRC), giving adequate reassurance that all the correct regulations are in place.
Following careful advice on property investment, investors often opt for SIPPs in the knowledge that they are safe, tried and tested UK government approved investment vehicles. They then enjoy the ultimate freedom to choose, manage and control their own property portfolios if they so wish, without putting their pensions entirely in the hands of the government. However, it is essential to conduct careful research and truly understand the principles of a successful property investment strategy, before taking the plunge.
If you are someone who does not feel entirely comfortable managing your own investment portfolio or picking your own shares and funds, then it is vital to seek professional property investment advice or use another pension strategy that might suit you better.
Geared chiefly at an investment property strategy, SIPPs allow flexible investment into commercial properties (not residential, unless they are part of a hotel, care home or other public housing plan).They also boast valuable tax benefits: the complete absence of income and capital gains tax from the growth and rental yields achieved, provided funds are directed back into the SIPP, makes them an extremely attractive option to investors.
Upon retirement too, 25% of the fund can be paid out as a tax free lump sum; alternatively, if you die prior to retirement, the entire pension fund can be paid out as a tax free lump sum, meaning no inheritance tax. An added advantage of a SIPP is the ability to borrow up to 50% of the value of your SIPP fund. For example, with a pension value of £100,000, you can borrow a further £50,000, giving you further buying power to increase your portfolio.
A good property investment guide will help you find suitable SIPP providers and explore all the buying options currently permitted under the SIPP scheme. Broadly speaking, these include full or part investment into shopping malls, offices, factories, shops, plots of land in holiday resort areas, or agricultural land, forests and other green investments.