Under existing rules, the investments which an approved pension scheme can
make are tightly controlled. The SSAS has perhaps the most flexible investment
ability, but even here there are restrictions (for example there is a ban on
acquisitions from members).
From “A Day”, the investment rules will be much looser, enabling funds to own
virtually any type of investment. For the first time ever, pension funds will
even be allowed to invest in residential property.
The main restriction will be on shares in the sponsoring employer – the pension
will not be allowed to place more than 5% of its fund value in employer shares.
Loans to members will not be permitted, and loans to the sponsoring employer
must meet some strict requirements (including the requirement to be fully secured, to last for no more than 5 years, and to carry interest of at least base plus 1%).
Pension schemes will be limited in their borrowings to 50% of fund value. This
limit will also apply to any loans to the employer.
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