Can I invest my pension in gold?

There are a number of providers who will sell investment grade gold bullion to pension schemes.

Generally, if you can touch, stroke or enjoy something then you can't buy it with your pension.

Can I invest my pension in gold?

Can I invest my pension in gold?

This naturally rules out cars, tapestry and fine wine but also commodities and precious metals such as copper and silver. An exception, though, is gold (well, some types of gold).

Some SSAS and SIPP providers allow you to use your pension funds to buy investment grade gold bullion, provided the gold bullion is in a form acceptable to HM Revenue & Customs and you or anyone connected to you cannot get any personal use from the asset. Unfortunately, as the gold must be in the form of a bar or a wafer, gold coins and sovereigns do not qualify and the gold bullion must be professionally stored.

There are a number of providers who will sell investment grade gold bullion to pension schemes. It is worth considering the reputation of the provider and the gold it is providing before carrying out any transactions with them.

The London Bullion Market Association, incorporated at the request of the Bank of England, maintains a list of refineries that produce gold to its specified standard, known as Good Delivery Bars, and of providers whose handling and storage procedures meet its requirements. The relevant advice from your pension adviser is also essential.

When investing directly in gold, you may either purchase physical gold bars that are demonstrated to be yours, or you can buy a share of a large gold resource. This latter option allows lower volumes to be purchased but is less safe as you are effectively relying on the provider to keep a log of how much gold you own and you may not physically take ownership of your allocation.

Gold can also be bought from your stockbroker through Exchange Traded Commodities (ETCs). Gold ETCs are asset backed bonds that track the performance of gold and they are traded and settled like any other type of shares. As the investment is open-ended the price is not subject to supply and demand forces and they can be bought and sold easily. In fact, as you cannot touch (or enjoy?) assets held in the ETC, you could use ETCs to gain exposure to other markets such as copper or silver.

ETCs have different structures. Physical ETCs have real assets backing the investment they are making, whilst Synthetic ETFs do not. Synthetic ETCs use derivatives to track the performance of gold. It is therefore important you understand the type of ETC you are investing in and, as with any type of investment, the risks involved.

With Synthetic ETCs, there is a risk that the financial institution offering the derivative will not be able to honour the promised return. Holding this type of investment can therefore be more risky than, say, holding gold directly through a provider listed with the London Bullion Market Association. Again, obtaining the relevant advice is essential.

With either type of investment in gold there would be no capital gains tax on the sale of the gold if held in a pension scheme.

Whether holding gold directly or indirectly, obtaining the right advice before proceeding is essential as the different ways of holding gold come with different costs and different default risks.

Pension & Equity Release

What Is Equity Release?

Equity release is the use of financial arrangements that provide the owner of a house, or other property, with funds derived from the value of the property while enabling them to continue using it.

How Does Equity Release Work?

Equity release is aimed at homeowners aged 55 and over. It allows you to take some of the value of your home as cash.

Pension plan to Equity Release

A pension equity plan is a defined benefit plan that provides an annuity or lump-sum benefit at the termination of a participant’s employment. Pension equity plans define benefits in terms of a current lump-sum value. Annual credits can be based on age, service, or a combination of both.

Editorial Note: This content has been independently collected by the EveryInvestor advisor team and is offered on a non-advised basis. EveryInvestor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.
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