UK Boutique Lending Firm Rolls Out Pension-Based Finance Offering

Tom Burroughes

29 June 2015

With pensions still prominent in UK wealth managers’ minds following recent liberalisations in the spring, the world of high net worth credit has taken a twist with the launch of a service allowing company directors to borrow against the value of retirement plans.

can take six to nine months to organise," he said. To provide such a bridging loan, HNW Lending typical ly charges around 1 per cent a month - an acceptable rate as such bridging loans only run for a few months before the pension-linked loan comes through, he said.

According to a statement, a loan from HNW Lending, plus interest usually at 1 per cent to 1.25 per cent a month, is repaid from the pension scheme once converted to a SSAS.

The HNW Lending service enables companies to borrow for their businesses while going through the conversion to a SSAS, which has to be registered with HM Revenue & Customs, the UK tax authority. The firm said it will also lower its loan size to £25,000 ($39,350) for these types of loan.

A SSAS is an occupational pension scheme set up under trust with fewer than 12 members. It is the only form of pension scheme that can lend money to a business. The organisation has to develop a business plan explaining how much it wants to borrow and how it will repay this – plus interest – and the trustees of the SASS decide whether or not it is an appropriate investment for the pension scheme. If they decide it is suitable then a SSAS can lend up to 80 per cent of the pension scheme funds if it is a business not connected to the pension fund beneficiary, or 50 per cent if it is connected.