Exotic and Esoteric Investments
The pension arrangements we operate allow the full range of investments permitted by HM Revenue & Customs (HMRC).
HMRC actually allows any investment to be made by UK pension schemes, but a number of these will incur heavy tax penalties which make them completely unviable (such as residential property, art, antiques, stamps, fine wines, yachts, vintage cars and other tangible moveable property). We must report any taxable investments to HMRC, and wherever possible must arrange for the tax charges to be paid from the pension fund. For this reason we reserve the right to refuse any investment we feel may be deemed as taxable, but as the investment strategy of the pension scheme is ultimately determined by the member(s), we cannot be held liable for any tax charges that HMRC does impose.
There is however a wide range of more unusual investments which are permitted as pension investments, such as:
- Traded futures and options (relating to stocks and shares on a recognised futures exchange).
- Companies quoted on a recognised overseas stock exchange
- Second hand endowment policies
- Hedge Funds
- Contracts for Difference
- Offshore funds
- Investment grade gold bullion
- Pooled investment vehicles and syndicates where the member or connected parties cannot influence or control the investment (known as "Genuinely Diverse Commercial Vehicles")
Pooled investment vehicles such as Unit Trusts, OEICs, Managed Funds and Genuinely Diverse Commercial Vehicles are permitted to invest in residential property and "tangible moveable property" (e.g. art, antiques, stamps, fine wines, classic cars, jewellery etc) provided they do not permit pension scheme members or connected parties to influence or control the investment strategy - normally defined as having more than a 10% interest in the fund. Provided a fund is structured correctly it is therefore possible to invest in almost any asset class.
We carry out a due diligence process whereby any unusual investments are checked to ensure that in our opinion they will not be deemed as taxable. As part of this process, we also look at the way in which the investment is being marketed. This is because pooled investments which are not authorised by the Financial Services Authority cannot be marketed to the general public.
Where non FSA authorised collective investments are being proposed as investments of IPS pension arrangements, we expect advice to have been given by an Independent Financial Adviser. The only categories of individual we can allow to make these investments without receiving advice are known as "Sophisticated Investors" and "High Net Worth Individuals".
If you would like us to carry out due diligence on a proposed investment to confirm whether we will accept it as an investment of an IPS Pension arrangement, please have the investment provider complete the attached Investment Providers Questionnaire and return it to us with the documentation mentioned.
Please contact us if you have any questions or queries about exotic investments.
