FSG protests over loan
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• THE Factoring Services Group is mounting a letter campaign to MPs to contest Government proposals to slash the amount a firm may borrow from its own self-administered pension fund from 50% dawn to 5%.
A business may put money — free of tax — into its own pensions funds (usually a fund for the business owner's retirement). With a self-administered fund, up to half of the value of the fund can be loaned back (at a commercial interest rate) to the company.
"Capital is always short in private firms," says the FSG, "so the ability to use the fund to buy its premises, and invest in new equipment, is valued by firms. It is a good way for private business people to build up a hit of money for when they retire, without starving their firms of valuable capital.
The proposal to reduce the percentage from 60% down to 5% is going to cause extreme hardship and difficulty — to the extent that some firms may be put out of business."