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Putting a charge on a property owned by a small pension fund? Possible?(7 Posts)
Might be a fairly specialist question! But if anyone has experience I'd be grateful. Going to put it to my solicitor too, but on the off chance someone can point to information that says "absolutely no" it'll save me paying for that from solicitor!
So - I'm divorcing, and the plan is to put a second charge (after mortgage, which he is taking over) on our matrimonial home - the % of my equity. This should be OK, but there is a small possibility the underwriters will refuse him to take over mortgage if the charge is on (according to mortgagor).
So thinking through other options.
He is in a family firm, two members of pension scheme. Pension fund owns two residential properties. A google of property as pension investment suggests they'll be in the name of the trustees of the pension fund.
Is it legally possible to put a charge on a property that forms part of a pension fund?
I'm sure triggering a sale at some point would be hugely detrimental due to paying back all tax relief attracted by it as a pension investment. But as a temporary measure for protecting my money, it could be a useful backup option!
You want a deferred interest in a property, secured by a charge. Have I got that right? I don't understand where the pension comes in. Does it already own the property, or are you suggesting it buys the property?
There should be no problem with a SIPP selling an asset. It couldn't grant you a charge though, as that would be taking money out if the pension (don't take my word for this though - pensions are a very specialist subject) which is taxed at something like 55%.
Are you proposing that your H puts his share of the property in to the pension?
The first thing I would say is SiPPs can not own residential property only commercial property so whilst they may see these properties as their pensions they may not be protected in the same way.
You could be entitled to some of his actual pension as well as house equity so discussing further with solicitor.
Thanks for your help.
You can't buy residential property in a SIPP, but you used to be able to - and it is from quite some time ago. So - it already owns it, I believe now without mortgage. I presume it's ring fenced as bought before rules change - it also meets guidelines of not trading in property, as theyve had it long term. This is totally separate to our matrimonial home.
I'm very reluctant to suggest he sell a SIPP asset, precisely as you say - don't want to attract 55% tax! That's an absolute last resort. Even a charge isn't ideal, as there'd always be the tax issue if I needed the money before retirement. Ideally I'd leave it til then, but you never know how circumstances will change! So it sounds like I can't put a charge on it.
Ideal situation is a charge on matrimonial home, nothing to do with pension. I hope the mortgage company accept the remortgage on that basis.
I'm aware I can request some of his pension - doing the sums with solicitor now!
Bloody divorce. Bloody wandering STBXH.
The other thing I guess I could do is request a massive share of his pension fund, to reflect my equity in the matrimonial house, and forget charges altogether. Downside, as I say, is that pension is no good to me if my financial circumstances change and I need the money earlier. I'm only 38!
I'm not a specialist in SIPPs but am a pensions lawyer, and selling a property held in a SIPP wouldn't trigger a 55% charge in and of itself - it would be passing the sale proceeds out of the SIPP that would do that. It would be legally possible to grant a charge over a property held in a SIPP but I can't see how the trustees could ever actualy do it - they would be diminishing the value of fund against the best interests of the beneficiaries. Even if your STBXH is a trustee and is willing to do this, any other trustees and beneficiaries should be opposed, and if it went through I think your interest in the property would be vulnerable to attack in the future either through court or the Pensions Regulator.
If a significant portion of his assets are represented by his pension fund, a pension sharing order is probably the way to go. The money will essentially be locked away until you're at least 55, but at least you'll get some tax breaks along the way.
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