What to invest in UK… be wise with your pension investment
An annuity is an income stream that a UK taxpayer buys from an insurance company with funds in their pension pot. From 6th April 2015, new pension freedom reforms come into place whereby a UK taxpayer can now have greater flexibility on how they would like to invest their pension funds.
Previously, UK pensioners had to buy an annuity and at the age of 55 they could spend 25% of their pension pot tax-free. The remaining balance would be taxed at a rate based on their annual income tax threshold.
Annuity rates have decreased from almost 11% in 1990 to as low as 4.5% in 2014. Investors certainly could be better off in exploring other investment opportunities.
The worry is that people may squander their pension funds on holidays and luxury goods. In the short term the spending may give the economy a welcome boost however, it could leave pensioners dependent on family to survive.
The government has set up a free and objective pension advise service called Pension Wise. There have been rouge traders that have set up pages to mimic the Government website and have swiftly been brought down.
Investors should assess their options carefully and look at fundamentals of the markets or assets in which they choose to invest. There is no hurry, it is important to make the right choice. It is not only the steady income stream which people are being mindful of but also considering how the asset can be passed on to beneficiaries and the tax implications.
Annuities are guaranteed income streams and they certainly have their downfalls. A single-life annuity will provide a fixed regular payment at the highest starting rate but once deceased the payments will stop so if you have a partner or dependents they will not receive anything. Guaranteed annuities only pay an income for a certain time, in most cases up to ten years. If you pass away during the guarantee period income is paid to your dependents or can be converted into a lump sum and inherited along with the rest of your estate.
Investors are opening their eyes to opportunities in property investment because it can provide a steady income over an investors’ lifetime and the asset can passed on to dependents with capital growth (unlike annuities).
What investors do not want it is the inconvenience of managing properties during retirement. Buy-to-let properties can be quite time consuming to manage and the repair costs can eat away at the yield. Mortgage rates are at an all time low and the UK is on the verge of deflation but rates will increase at some point and the burden of having a mortgage in retirement is not that appealing.
Income Investment Ideas
Care Home Investments
The UK is facing a serious shortage of care facilities for the ageing population. Britain’s over-65′s now outnumber people under the age of 16 and thereis a desperate need for more assisted living developments for the ageing population.
If you were wondering what to invest in UK, there is a particular scarcity of specialist care homes for dementia patients. The government is making cutbacks on NHS spending and privatising parts of the NHS. With £65,000, investors can purchase a leaseholdcare home investmentthat will provide care to elderly mentally infirm patients with a 10 year income stream of 10% Net after all management costs.
Glasgow Airport Parking
Year on year air traffic at Glasgow airport has increased by seven percentage points. Nearly 500,000 passengers each month depart from the airport and nearly sixty per cent choose to drive. The demand is simply overwhelming and Emirates long haul flights are being added, with Easyjet taking up additional short haul flights. Cheaper fares with lower fuel prices are driving air traffic forward and with it, the demand for long stay car parking. 300,000 potential tenants every month with only 4,500 long stay spaces.
A £20,000 investment in a leasehold property that is fully managed by Airparks, with 15 years of specialist experience the income steam of 8% Net is assured for two years and a six year lease going forwards. High Yield Income Investment has never been simpler, car parking is inflation linked and income is projected to increasing to £2,000 (10% Net) by year three.
Student Accommodation Investments
There are other options available that offer better returns with less inconvenience than buy-to-let property.
Investors can purchase fully managed student property studios in cities like Leicester which have 39,000 students. The implementation of the article 4 direction ruling is limiting supply of properties by preventing single family homes being converted into student accommodation, with robust demand, this is having a positive impact on rental income. A fully furnished studio for sale in Leicester that costs £73,800 with 8% Net rental income assured for 5 years.