Case Study

We ask John Russell-Murphy, co-founder of Grosvenor Park Intelligent Investments...

How are you finding the pension market is impacting on Grosvenor Park Intelligent Investments?

The pension market has had an enormous impact on our company; we are now meeting more and more clients on a weekly basis who are unhappy with the current performance of their pensions and are looking for alternatives.

We are therefore helping these clients to look for alternative and guaranteed schemes to improve their pension funds. The main way in which to improve a pension fund is to transfer the funds into a self-invested personal pension (SIPP) and regain control of their pension funds.

What are the risks of clients transferring their pension into SIPPs?

The main risk of transferring pensions into SIPPs is that with a client’s current pension provider, they will receive a fixed return in the future (although this return is shrinking year by year), but once the funds have been taken out from that provider, the fixed return will no longer be applicable and the client will need to manage their own SIPP.

One thing that clients need to remember when transferring their pensions to SIPPs is that the income and capital generated from investing in alternative investments will go directly back into the SIPP and not the investment. So, once this route has been chosen and the funds have been transferred from a pension into a SIPP, it is ongoing and the money will need continually reinvesting in order to maximise the pension fund ready for retirement age.

What types of alternative investments are available to clients who transfer their pensions into a SIPP?

There is such a wide variety of products now available, ranging from oil, bamboo, fine wine, property, classic cars and stamps. However, not all of these products are of high-quality so I would always advise seeking a reputable company, such as GPII. Clients know that GPII will support them in finding investment opportunities that are best suited to their needs, whilst following a strict due-diligence process to make sure that the products are what they say are.

What do you think the future holds for the pension market?

The future of the pension market currently looks particularly bleak.

Firstly, because fewer people are now being sold pensions, this will result in a higher number of people no longer investing for their retirement. In effect, this will put an increasing pressure on the state to help people survive during their retirement years, which the state will just not be able to cope with.

Secondly, there has been a new ruling under the 2011 National Pensions Bill stating pension companies now need to regain substantial funds in reserve in order to guarantee future payments. Thus, the returns that are paid out by pension companies are also dropping so individuals will receive smaller and smaller returns in the future. The knock-on-effect from this will have a dramatic impact on the future of the pension market.

So that brings us to out last question, have you invested using a SIPP?

Yes, I have transferred my final salary pension scheme into a SIPP. The final salary scheme incorporates a lot of deductions that I do not reap the benefits from – by gaining control of my pension again in transferring the funds to a SIPP, I can now decide what I want to invest the funds in to. Having chosen to invest in the bamboo bond – this will pay me approximately seven times the amount that I would have received in the final salary scheme.

If you would like to receive a FREE pension review or find out how to maximise your pension funds or SIPPs, email John Russell-Murphy at jrm@gpi-invest.com

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