Deal of the Week

June 12, 2009 6:28 pm

Deal of the week: The Axa Family SunTrust pension

What’s the deal?

Invest your pension alongside members of your family or business partners with certain tax advantages.

Axa Winterthur’s Family SunTrust is a group self-invested personal pension (Sipp) but also has some characteristics of a small self-administered scheme (SSAS), commonly used by businesses. As with a SSAS, all members of this Sipp invest in the same holdings.

Investments can include commercial property, Axa’s own products and other stocks and shares. The product is named after Axa’s Sun Life brand and builds on the company’s reputation as a provider of SSASs.

Up to 12 people can invest in the plan and Axa says a minimum investment of £200,000 is recommended. The schemes are also suitable for people who know each other and want to invest in something together, such as property. Or it can be used by self-employed professionals such as partners in a legal practice who want to buy their commercial premises together.

Is this good?

The options after age 75 make the scheme efficient for inheritance tax purposes. Members can go into a scheme pension with a 10-year guarantee, which can ensure that much of the pension money is paid out to heirs.

A scheme pension is also a good alternative to buying an annuity or moving into income drawdown, as under a scheme pension the income paid out to the member is recalculated yearly, rather than fixed at a set amount. It is also handy for people who want to pool their pension money to invest in the same thing and cut costs.

What’s the catch?

It’s not cheap. There’s an initial set-up fee of £500, plus an annual management fee of £675. Each member (excluding minors) pays a further £100 a year. Add to this commission and investment management fees, and the charges tot up to more than an average group Sipp. Business partners should note that the SunTrust doesn’t allow the pension to borrow money, which is often a facility used by SSAS members to buy their commercial premises.

Investing in exactly the same way as everyone else in the scheme may also not suit everyone.

What’s the alternative?

Rowanmoor Pensions launched a near-identical product three years ago which, until now, was the only one of its kind. Its Family Pension Trust has higher fees – set-up costs are £1,150 plus £110 per member. Annual fees include a £270 trustee fee, £650 administration fee plus £135 per member. Rowanmoor argues that its service is superior to Axa’s. It also accepts any HMRC-approved investment including overseas property. Axa is likely to subject such requests to scrutiny and could turn them down.

How do I find out more?

www.axawinterthur.co.uk/familysuntrust; www.rowanmoor.co.uk

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