He was contacted by the promoters of a commercial property scheme in northern England who suggested he join a syndicate to buy properties in the scheme.

The suggested funding method was that he would transfer the value of his existing personal pension policies into a new, self-directed personal pension plan arranged by the promoter of the scheme.

His funds, along with those of other members of the syndicate, would be used as a deposit.

Borrowing would be arranged for the pension funds to complete the purchases. All rental income from the properties when completed would be paid into the syndicate members' pension funds taxfree, and when the time came for properties to be sold, the proceeds would be paid into the pension funds without capital gains tax.

The proposition had some appeal for Martin, as he felt that his existing pension plan was not performing too well. He had started it 15 years ago through a direct sales agent of a life assurance company and had steadily increased his contributions over the following years.

However, he decided to seek independent advice as he felt that the promoter of the UK property scheme clearly had a vested interest in selling the properties and might not be looking at his overall circumstances. He contacted Liam Ferguson of Ferguson & Associates, a multi-agency intermediary and mortgage intermediary in Ratoath, Co Meath.

"When we examined Martin's overall portfolio, " says Ferguson, "we established that most of his net worth was tied up in property.

He owned his home and the shop from which his business traded, both of which had substantial equity in them. Apart from that, he had some savings in a deposit account, a deposit SSIA and his pension policies.

"When we examined the personal pension plan, we discovered that the charges on his monthly contributions were causing a major drag on his fund's performance. The original direct sales agent had received a large chunk of his first year's contributions in commission, and every year since, when Martin increased the monthly contribution, the agent got a large chunk of the increase, even though Martin had lost contact with him years ago.

"While we had no issue with the quality of the properties being offered in northern England, we felt that if Martin transferred all his existing pension fund into this arrangement and then borrowed against it, he would be far too heavily exposed to the fate of the property markets in Ireland and England. The effect of borrowing, while it multiplies the potential gain on an investment, also multiplies the potential loss.

"His existing personal pension fund was invested in a diversified portfolio of assets containing equities, property, bonds and cash across various market sectors and various geographical locations around the world. In all, the existing fund contained over 200 different assets. To go from this to a fund with just one asset which was then geared with bank borrowing seemed like a dramatic shift in risk profile.

"We recommended instead that he replace the existing monthly-contribution personal pension plan with a new one with no front-loaded charges and a level charging structure, so more of his monthly contributions would be invested. While we can offer no promises that the new fund will outperform the old, if substantially more of each contribution is actually being invested, at least it's starting without any handicap."

The new fund has the facility to split the pension fund between traditional managed funds and property funds run by professional fund managers and selfdirected investments. Martin is leaving a majority of his personal pension fund in a combination of predominantly equitybased managed and index-tracking funds, but is also using a portion of it to buy one unit in the northern English development. In that way, he won't miss out on the potential of the development but won't be betting his entire retirement on it either.