A new measure allowing occupational pension schemes to borrow for investment purposes will open up self-administered schemes to a much wider audience, according to Canada Life.

The life and pensions company has introduced what it calls a "starter" small self-administered pension scheme and says new rules introduced in the Finance Bill 2004 will make it easier for high-income earners to buy property using their pension fund.

"The only real reason to do a self-administered scheme is to buy property," said Mr Pat Ryan, pensions sales manager for Canada Life.

"Up to now, pension schemes couldn't borrow. Unless I had €400,000 in the fund, having the ability to buy a property wasn't any good to me."

The Canada Life starter small self-administered scheme (SSAS) is the only pensions product in the Irish market that allows people to start saving for their retirement through a normal insured pension, but later switch into a self-administered scheme pre-approved by the Revenue Commissioners.

Mr Ryan compared the scheme to buying a site with full planning permission to build later.

"You pay only a nominal fee for retention of planning permission and only incur further costs if and when you decide to build."

Before any switch, scheme holders will pay a trusteeship fee of €300 plus VAT to Canada Life's partner, the Independent Trustee Company.

After the switch, customers pay a set-up fee of €2,000 plus VAT and an annual fee of at least €900 plus VAT.

Aimed at high net-worth company directors, self-administered schemes have traditionally only been available through a restricted network of pensioneer trustees - individual or companies with pensions experience appointed in accordance with the requirements relating to the approval of SSASs - and larger brokerages.

These can charge set-up fees of up to €6,000, according to Mr Ryan. However, brokers are warning that Canada Life's starter SSAS could end up being very costly for people who don't use the in-built self-administered option.

"You pay €300 plus tax per annum before you even use the services of a professional trustee," said Mr Liam Ferguson, managing director of broker Ferguson & Associates.

"All it's really doing is buying you the convenience of the self-administered scheme being Revenue-approved from day one."

It is possible for people to build up an investment fund and then transfer it into a self-administered pension scheme later, Mr Ferguson said.

For annual premiums of €20,000 or greater, Canada Life's starter SSAS customers can access personalised self-directed investment funds managed by NCB Stockbrokers, Harvest Investment Services or Merrion Stockbrokers.

Mr Ferguson said the charges on the scheme meant that people would need to be contributing at least €20,000 a year in order for the product to make financial sense.

He described one target for self-administered pensions as "those people who think they will do a better job picking stocks that the professionals who manage pension funds".

Mr Paul O'Neill of Midleton-based broker JP O'Neill Financial Management, said the pension was only suitable for a small minority of people.

Company directors might be successful in running their own business, but they want to leave certain investment decisions in the hands of brokers, he said.

"If people have €30,000, €40,000 or €50,000 a year to invest in their pension and they want to have the option to play around a bit, they might consider it," he said. "It is a personality thing."

Having to write a cheque for €2,000 will also "put a lot of people off", he said.

Those looking for a tax-efficient way to invest in property might consider a pension mortgage, he said.

In this way, they could get access to their property: under the rules for a self-administered pension, any property bought with the fund cannot actually be used by the owner.

Canada Life acknowledges that many existing holders of self-administered pensions never fully exploit the control they have over their funds.

Mr Ryan estimates that around 45 per cent of self-administered schemes are predominantly invested in cash.

"They're actually paying for a structure that they're not really using at all," he said.

Annual accounts, trustee services and actuarial advice all has to be paid for, he added.

"That's fine as long as you do something sexy with the fund that justifies it."