A Family Pension Trust (FPT) or Group Scheme is designed for individuals who want greater control and flexibility over their pension savings.
However, due to its structure, level of responsibility, and investment flexibility, it is not suitable for everyone and is typically intended for individuals with more complex pension needs and higher-value funds.
Who can open an FPT?
A Family Pension Trust can usually be opened by:
Individuals with pension savings
An FPT is a personal pension arrangement available to individuals who want to:
- Build or consolidate their retirement savings
- Transfer in existing pension benefits from other registered schemes
- Take a more active role in managing how their pension is invested
Individuals meeting minimum investment levels
There is typically a minimum investment requirement to establish an FPT (for example, £200,000 through contributions or transfers).
This means it is generally suited to individuals who:
- Have existing pension funds to transfer
- Have accumulated higher levels of retirement savings
UK taxpayers and eligible contributors
Individuals can contribute to an FPT and may be eligible for tax relief, subject to HMRC rules and personal circumstances.
- Personal contributions may benefit from tax relief
- Employers can also contribute on behalf of members
Who can open a Group Scheme?
A Group Scheme (within a Family Pension Trust structure) allows multiple members to participate in the same arrangement, usually for shared investment purposes.
Groups of connected individuals
This could include:
- Family members
- Business partners
- Company directors or shareholders
The structure enables members to:
- Pool funds for certain investments (for example, commercial property)
- Take part in joint investment opportunities
Each member retains their own individual pension entitlement within the scheme.
Employers and companies
A business may establish or participate in a Group Scheme for:
- Directors or key employees
- Pension planning as part of wider financial or corporate strategies
Employers can also make contributions into members’ pensions within the scheme.
Key requirements and considerations
Trustee responsibilities
Because an FPT is set up under a trust:
- Members may act as trustees alongside a corporate trustee
- Trustees are responsible for ensuring the scheme is run properly and in line with regulations
- Trustees must act in the best interests of members and manage the scheme with care and diligence
Investment knowledge and advice
FPTs and Group Schemes typically involve a wide range of investment options and greater member involvement.
- They are usually recommended where a member is supported by a regulated financial adviser
- In some cases, individuals may proceed without advice only if they meet ‘knowledgeable investor’ requirements, depending on the investment and regulatory conditions
Long-term commitment
An FPT is a long-term retirement vehicle, with benefits generally accessible from:
- Age 55 (rising to 57 from April 2028), except in limited circumstances
Important regulatory considerations
A Family Pension Trust or Group Scheme is a complex pension arrangement and may not be suitable for all individuals.
- Investment decisions are your responsibility and can affect the value of your pension
- The value of investments can go down as well as up, and you may receive less than you invest
- Pension rules, tax treatment, and legislation may change over time
- Certain transactions, including pension transfers and some investments, may require regulated financial advice
Financial advice is important
It is strongly recommended that you seek regulated financial advice before:
- Opening a Family Pension Trust or Group Scheme
- Transferring pensions into or out of the arrangement
- Making investment decisions
- Taking benefits from your pension
Alltrust does not provide financial advice, so it is important to speak to a suitably qualified and regulated financial adviser who can determine whether this type of arrangement is appropriate for your personal circumstances.
Who is it suitable for?
An FPT or Group Scheme may be suitable if you:
- Want greater control over your pension investments
- Have a larger pension fund or can meet minimum investment levels
- Are comfortable making investment decisions or working with an adviser
- Want the option to invest alongside others, such as family members or business colleagues
Summary
A Family Pension Trust or Group Scheme is typically available to individuals and groups looking for a more flexible and hands-on approach to pension planning.
While it offers a wide range of opportunities, it is best suited to those with:
- Sufficient pension assets
- A long-term outlook
- Access to financial advice or investment expertise
Taking professional financial advice is an important step in deciding whether this type of pension arrangement is right for you.
