If the pension benefits have all been brought together this will not be possible, whereas if they have been kept separate it will be – although the trade-off is that client will need to wait until they reach age 55 before crystallising the benefits held in the non-protected scheme(s).
A final note for advisers to be aware of around protected pension ages is how lifetime allowance usage is measured.
Back in the run-up to 2006 HMRC decided that the earlier age at which those with protected pension ages were able to access their pension meant the benefits had a higher capital value.
As a result it chose to increase the impact of crystallising these benefits on an individual’s lifetime allowance. So, for each complete year before an individual is due to reach age 55, their lifetime allowance is reduced by 2.5 per cent.
This treatment of the capital value made sense in the days when most pension benefits were taken as a secure income (a lifetime annuity or scheme pension) but, in the pension freedoms world, it now makes less sense.
A drawdown pot of £800,000 is worth £800,000 regardless of the age of the individual when it is created.
Pensions and sports - Investments
Moving on from pension benefits, another area where the sports and pension worlds collide is around investments.
Holding commercial property has been one of the cornerstone investments in Sipps and Ssas's since they were first created. A typical commercial property held in a Sipp is an office building, warehouse or retail unit.
But more unusual properties are often seen, sometimes with a link to the sporting world. I am aware of Sipps which either do own, or have owned, a football league stadium, a cricket ground, and for those with an interest in motorsports, a go-karting track. We are not talking about Wembley, Lords or Silverstone, but interesting nonetheless.
Queries about owning land with the right to earn income from sporting rights within a Sipp or Ssas are also surprisingly common. For those unfamiliar, sporting rights are those which allow people to hunt, shoot or fish on a piece of land.
This right can be sold on to others, meaning the use of this land can generate an income.
Great care is needed with these requests. Issues around personal use of the land by the member, the risk of trading, and VAT complications can cause problems for the unwary. For these reasons many Sipp and Ssas administrators are very cautious about entering into these transactions.
Another sporting-related investment that will be more difficult to place in a Sipp or Ssas than a few years ago is equities in a football club.
