My precious: Using gold to protect pension assets

Precious metals expert Daniel Fisher shares his thoughts on retirement savings, specifically gold allocations in light of pensions freedom and choice

The new pension freedoms introduced in April provide a great opportunity for the British public to have more control over their pensions and more flexibility to achieve the best value from retirement savings.

However, it also means that some people may mis-allocate their cash, or suffer at the hands of market turmoil, and be left with very little to provide for their retirement years.

Here are three tips from precious metals expert Daniel Fisher at Physical Gold on how best to use gold to protect your pension.

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1: Hedging against volatility

When stock markets and bonds fall, it is more likely the price of gold will increase.

Countries hold gold as a precaution to safeguard themselves against inflation, loans, debt and economic disasters – the total gold holding globally was just under 32,000 tonnes in the summer of 2014 – and individuals use gold for similar reasons.

Gold is often used by investors to provide insurance against market shocks as it is non-correlated to the most common asset classes.

This means that holding some gold in a portfolio will reduce the volatility of your pension pot making its value more predictable and therefore meaning retirement plans are more reliable.

This infographic shows just where the gold is held globally.


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2: Choose bars over ETFs in a SIPP

There are several ways to gain exposure to gold within a pension, from buying mining shares to exchange traded funds (ETFs) and gold funds.

However, if the aim is to achieve true portfolio insurance, then by far the safest way to own gold is with actual gold bars.

Ensure the gold is fully allocated rather than leveraged like ETFs and segregated, meaning it is fully ring-fenced from other investors’ gold.


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3: Buy individual retail size bars

The Financial Conduct Authority (FCA) has recently classified gold bullion as a ‘standard’ asset, putting it in the same category as cash.

Being able to sell an asset quickly means investors can achieve the best possible price. Investors should purchase small retail size gold bars for their pension to provide maximum liquidity and flexibility because it’s not possible to break one huge gold bar in half if they only wish to sell part of their holding.


Fisher said: “With up to 45% income tax relief on SIPP gold investments and low gold prices, now is a good time to invest in gold. It allows hedging against riskier investments and market volatility and, of course, can also increase in value too.

“A significant market fall five years or less before you were looking forward to releasing the cash in your pension would leave you with the dilemma of postponing your retirement in the hope that, over time, markets would recover value, or you might simply retire with a compromised lifestyle.

“Buying gold bars that are securely segregated and allocated means that the exciting pension changes coming this year can be fully taken advantage of within a margin of safety.”