For those fortunate to have
- Small Self Administered Pensions ( SSAPs or Self-Directed Trusts )
- Self Invested Personal Pensions ( SIPPs)
- Pre-Retirement Bonds ( or Buy Out Bonds )
- Approved Retirement Funds (ARFs)
- Approved Minimum Retirement Funds (AMRFs)
There is one inescapable factor
- Any profits made from investing these funds are tax free
When it is time to press that retirement button at your preferred age ( minimum 50 ) another inescapable factor is that with the ARF and AMRF, you MUST withdraw at least 4% each year called imputed distribution ( from age 60 up to age 70 ) and 5% from age 71 plus 6% if the fund is over € 2million.
Add in the annual management charges (AMCs) and roughly you are talking about a minimum 5½ % being taken out of the ARF or AMRF every year from age 60.. Therefore if you do not match this percentage through shrewd and careful investment of your funds, you are eventually going to run out of money.
We are living longer and healthier lives so the pressure is on to maximise our wealth even after we have retired. Therefore every ARF / AMRF investor should be scouring the land for opportunities to preserve and grow his or her funds so that the books balance at the end of each year.
I receive many opportunities each week to invest in projects via loan notes – that is, a loan from your pension fund for a specific project with a specific term and specific profit in mind.
Ranging from mid-sized corporates looking for short term bridging finance for their working capital with yields of up to 10% to property schemes, start-ups and even investing in completions of the books of established authors. I personally invested in PINERGY the electricity supplier. It was for a year and I received 15% at the time for my pension fund – tax free for the fund. The current norm is c. 10% and if you have pension funds currently on deposit or worse still in a current account, your maximum rate is less than 0.5% !
To be on the list for suitable loan note projects for your pension fund, please email me at jlowe@moneydoctor.ie or call the office +353 1 278 5555