is a Private Pension Scheme or Group SIPP (Self Invested Personal
Pension) set up by and managed for Barristers and Clerks (“the Investors”). The Trust was
created in July 2004 for the
purpose of buying property at 15 New Bridge Street, London, in order to fulfil two objectives (i) provide
an appropriate level of
accommodation for Barristers in practice together and (ii) provide a substantial asset at the
centre of a pension scheme for Investors.
The property was
purchased and refurbished with the intention of leasing it to the Investors'
principal business namely 15 New Bridge Street Chambers (15 NBS). They took up
residence in October 2004. Part of the rent collected from 15 NBS is used by the
Trust to pay the mortgage with which it purchased the property. This simple
arrangement results in financial stability for the Trust and security of tenure
for the Chambers. The Trust and Chambers remain discrete legal entities with
separate aims, financial & management structures and rules of conduct.
The Trustees are Alliance Trust Pensions
Ltd. (the Professional Trustee & Pension Company)
and Riverside (Sipp) Ltd of which Jon
The professional trustee holds and manages the assets of the
individual investors and oversees the group SIPP. The day to day management of the premises is carried out by the
Directors of Riverside (Sipp) Ltd in association with the principle tenant (15 NBS). Although
the Directors are members of 15 NBS their over-riding duty is to the building as a Trust asset. They ensure that it is properly used, maintained, insured, rented-out, etc.
The Trust and Trustees are governed by the
Trust Deed and the Supplemental Deed. These documents signed by all the
Investors give the Trustees a considerable amount of discretion
to act in the best interests of the Trust, the Investors and the principal
tenant. Important managerial or financial decisions involving the Trust and
the property are made by the Trustees acting together, decisions involving an individual’s SIPP are private to and made by
an individual with Alliance Trust.
Processes such as the appointment, tenure
and removal of Trustees and the buying and selling of shares are all dealt
with in the Trust Deed. To purchase shares and be an Investor in the property, an individual
must be a member of or a senior employee at 15 NBS. Changes in membership or
employees of 15 NBS may give rise to the opportunity to purchase or to sell shares and priority
will be given to those with the least number.
There is of course always the possibility of sale/purchase through private
tender provided the intended purchaser is a member of 15 NBS.
may in their discretion authorize the retention of shares by someone departing 15 NBS but, the number of shares permitted to be out-with the chambers is limited. This arrangement provides flexibility in careers and
locations and, allows
Investors to leave or retire without necessarily facing the prospect of a forced sale. Since July 2004 five Investors have taken
advantage of this facility and one sold his shares at a profit but remains an
Associate Member and has the opportunity
to invest with the group elsewhere in the future.
The Trust Deed lists the names of the
Investors, the number of property shares purchased and the sum
indemnified by them. From time to time as shares are bought and sold or, members
leave chambers, these names and figures will change. Such fluctuations will be
noted on the register. Unless the Trustees agree otherwise, there is a limit to
the number of shares any one person may hold. In this way no-one can gain a
controlling interest. The current investors are listed on the Members page.
15 New Bridge Street
completed the purchase of 15 New Bridge St. on 13th of July 2004. The
purchase was funded from two sources, monies from
pensions, savings or other funds (realising 37% of the property value) and, a mortgage
with the Allied Irish Bank (63% of the property value).
The value of the property was divided into shares. The existing
resources were used as part-payment for a number of shares and the mortgage covered the rest.
It is repaid from the income generated through the lease to 15 NBS. In
order to maintain good risk management three quarters (¾) of the
mortgage is at a fixed interest rate. Whilst slightly more expensive than
current variable interest rates, fluctuations in the market have a limited
impact on the sums due to be repaid so the Trust is financially stable.
The rent payable by 15 NBS for its
occupation of the premises is set at the market rate by an independent rent-assessor rather than any member of the Trust or Chambers.
A further assessment will be made in mid 2006 and thereafter every three years.
The short interval between assessments ensures that any rental changes do not
create financial difficulties for the Trust or the tenant.
The current Trust income exceeds the
mortgage. The Trust retains a portion of this excess to manage/maintain the
property the rest being allocated to the Investors’ individual SIPP accounts at a
rate determined by the number of shares they have purchased. Although allocated
to individuals, the money is actually retained in the Group account where as one
large sum it gains a
higher rate of interest. This, together with
the expected increase in the value of the property over time, provides a direct
benefit to the Investors for the risks they take.
The risks the Investors take are three-fold:
(i) if interest rates on the variable portion of the mortgage rise such that the
mortgage payments exceed the rental-income, they will have to pay a premium
according to the number of shares they hold, (ii) should property prices
collapse they still have to fund the mortgage, (iii) if the chambers collapses,
they will have to find a new tenant to fund the Trust. None is currently adjudged as