RateSetter Now In A Pension

Low-risk RateSetter has overcome considerable regulatory barriers to become the first personal loans P2P lending website to allow its lenders to lend through a pension. Indeed, two pensions.

Lending through a pension means you pay no tax on the income you earn.

Pensions come with additional costs though, so anyone planning to lend only very small amounts over the coming years are not likely to gain much from wrapping up their RateSetter loans in a pension.

Your two choices

If you have large pots of money to put into RateSetter, it is likely to be worth the additional costs – even though those costs will probably be considerable.

I know that European Pensions Management's SIPP, one of your two options, is not cheap. However, it keeps its exact pricing hidden away from people who aren't signed up, so I can't give you any more details at this stage.

The other RateSetter pension is a London & Colonial SIPP. Again, you can't find pricing information on its website. With this one, you will also have to go through a financial advisor to get it. This means you'll need to pay advice costs as well. And your advisor might want to steer you in other directions.

About RateSetter

RateSetter has an incredibly low 4thWay^® Risk Rating of 10, which means it's only a little bit more risky than savings accounts (which are in the range of 0-8). This is largely down to RateSetter's tight criteria and a very large bad-debt provision fund to cover bad debts.

Read more: P2P Pensions Guide: Tax-Free P2P Lending.

The 4thWay^® PLUS Ratings are calculations developed by professional risk modellers (someone who models risks for the banks), experienced investors and a debt specialist from one of the major consultancy firms. They measure the interest you earn against the risk of suffering losses from borrowers being unable to repay their loans in scenarios up to a serious recession and a major property crash. The ratings assume you spread your money across hundreds or thousands of loans, and continue lending until all your loans are repaid. They assume you lend across 6-12 rated P2P lending accounts or IFISAs, and measure your overall performance across all of them, not against individual performances.

The 4thWay PLUS Ratings are calculated using objective criteria that can be measured and improved on over time, although no rating system is perfect. Read more about the 4thWay^® PLUS Ratings.

*Commission, fees and impartial research: our service is free to you. 4thWay shows dozens of P2P lending accounts in our accurate comparison tables and we add new ones as they make it through our listing process. We receive compensation from RateSetter, and other P2P lending companies not mentioned above either when you click through from our website and open accounts with them, or to cover the costs of conducting our calculated stress tests and ratings assessments. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.