Case Study - Meet Emma and Andy
Emma and Andy own an arable farm and are members of a Family Pension Trust. The farm is a family business, passed down from previous generations. The farm has 1,500 acres of land that includes an unused, isolated field of 25 acres, which their neighbour Ted, is interested in using for grazing and would like to enter in to a farm tenancy.
The majority of the Family Pension Trust assets are held in a common investment fund. Recent volatility in equity markets have worried Emma and Andy, who are now looking to find alternative investments to remove as much investment risk as possible.
Following a meeting, it was suggested that they purchase the field and lease it back to Ted through their pension. Although investment returns from land are typically low, the need for land for development locally means that there could be opportunities to develop the land in the future.
To finance the purchase of the land, the investment portfolio was sold and the cash was used to buy the land, which was then registered as an asset of the pension scheme.
In the event of the death of Emma and Andy, their share of the pension scheme could be designated to provide death benefits to the surviving members of the Family Pension Trust or their children, so the land remains part of the pension scheme without having to be sold. This way pension wealth can be retained in the scheme for future generations.