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Leyland-based business man, Peter Chandler, had no inkling of just how much the world would change during the course of his career when he inherited his father’s furniture manufacturing business. However, thanks to pension advice from Glynn his financial adviser, he was not only able to invest in the family business when presented with growth opportunities, but was also in an excellent position to completely change direction when competition from China created untenable market conditions.
It was Peter’s accountant that first signposted him to Taylor Patterson, advising him to seek a tax-efficient pension vehicle for the company’s property assets. Taylor Patterson informed Peter that putting the company’s furniture factory into a Small Self Administered Pension Scheme (SSAS) would provide flexible funding options for the business. This move would also create a secure pension fund for Peter, his wife Carol and any additional members that they may want to add to the scheme in the future.
Peter and Carol created the SSAS using the factory as the investment asset in 1986.The couple then used the loanback facility available via the SSAS to invest in automated equipment to help build the business.
Peter explains: “The idea of using the factory as a financial asset rather than just our manufacturing premises was completely new to us but the team at Taylor Patterson guided us through the process of establishing the SSAS and helped us to understand how we could use it to help provide flexible finance for the business in a cost-effective and tax-efficient way.”
The investment in new equipment helped the furniture business to expand but, longer term, growth in cut-price furniture imports from China meant that Peter’s family business struggled to remain competitive. Seeing the way the furniture market was going, however, Peter and Carol had already started to use their SSAS fund to refocus their efforts and build on their property portfolio.
Peter continues: “We realised that we needed a plan B for the business and used the SSAS fund to finance development of a number of small business units on the factory site. Our financial adviser, Glynn, advised us to put these assets into two SIPPs (Self Invested Personal Pension), one for myself and one for Carol, so that’s what we did. We now manage that property portfolio, putting the rents from the tenants into the SIPP plans and using the available cash to build or acquire additional assets.”
Since the closure of the furniture factory both Peter and Carol have transferred away from the original SSAS plan. However, following on going help from Taylor Patterson the scheme has been kept open for their four children who can now rebuild the fund through their own contributions and investments.
Peter concludes: “The factory unit itself was too large for a single tenant so we hit on the idea of converting it into a skate park which opened in July 2012 and is now operated by three of the children and we continue to find Taylor Patterson’s help invaluable as we navigate our way through pension rules to maximise the flexibility of our assets.”
Kerry Houghton, SIPP & SSAS Business Development Manager at Taylor Patterson stated “This is one of our more unusual tenants and has presented some challenges which together we have overcome.
As this is not your usual commercial style of property held within a pension fund, it may not have fit into standard requirements with most providers. However with our flexible approach, we are always thinking outside the box to see how we can help clients.”
For further information on how either a SIPP or a SSAS pension fund can assist in your pension planning, please contact Kerry Houghton on 01772 550614 or e-mail Kerry.firstname.lastname@example.org