SSAS Pensions

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Small Self-Administered Pension Schemes (SSAS Pensions)

Understanding the various pension options is an important step in deciding how best to plan for your retirement. Here we explore SSAS pensions to help you decide whether this is a suitable option for you.

What is a SSAS pension?

A Small Self-Administered Scheme (SSAS) is a type of pension available for limited companies or partnerships. It’s a way for company directors to fund their own retirement, giving them full control over how the pension fund is invested.

The scheme is limited to a maximum of 11 members – which is why it’s ‘small’. Many business owners use their SSAS to invest in commercial property, including their own premises. Other investment options are also available.
The members of a SSAS are usually the directors or employees of a small company, plus their family members.

What are the advantages of a SSAS pension?

The key benefits of a SSAS pension are:

  • Investment flexibility and control – You control how you invest the pension funds. Choose from stocks and shares, unit trusts, corporate bonds and commercial property. You can also invest in your company’s own business premises and lease it back – allowing you to buy commercial property while investing for your retirement.
  • Tax benefits – Members gain the same income tax benefits as with other pension schemes. In addition, assets and investments within the scheme usually have no tax liability, and there is no Capital Gains Tax on the sale of commercial property in the scheme.
  • Family benefits – Non-employee family members can join a SSAS and you can set it up to hold assets in trust. This means family members and even future generations can receive benefits. Because it is a pension, it’s also protected from creditors.
  • Borrowing opportunities – Companies can take out a loan from their SSAS pension to fund their business, at an interest rate of 1.5%. This reduces reliance on banks and their related charges. 
  • Cost savings – If you aren’t using a standard pension provider, you save on fees and management costs.

What are the disadvantages of a SSAS pension?

Things to be aware of when considering a SSAS are the 11-member limit and the fact that the members must act as trustees. That means the members are scheme administrators and legally responsible for running the pension arrangement and complying with pension law.
Members also manage the reporting to HMRC and claiming tax relief – although an accountant can do this for you.

What’s the difference between a SSAS pension and a SIPP?

Both SSAS and SIPPs (Self-Invested Personal Pensions) give you more control over how your pension pot is invested. A SIPP is set up by a single individual, while a SSAS can include up to 11 people.

SSAS pensions are only open to company directors and associated people and are controlled by all trustees of the scheme. Another key difference is that all members have a percentage share of the overall pension fund rather than their own individual pot.

Can I transfer my existing pension to a SSAS pension?

Yes, it’s possible to transfer your pension into a SSAS but this should be carefully considered with expert advice. You will need to look at the exit fees of your current pension to assess the potential impact of withdrawing funds. If you are in a defined contribution scheme it is often best to leave your funds where they are.

How do you draw a SSAS pension?

The usual pension options apply for drawing benefits. Once you reach the age of 55 you can opt to take the first 25% of your share as a tax-free lump sum, and then decide how best to take an income from the remaining 75%. You might purchase an annuity or invest in a drawdown scheme for example. Again, it is important to seek advice on the option that will work for your situation.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

What happens to my SSAS pension when I die?

A SSAS can be a good way to pass wealth on to your family members. There is no inheritance tax because your business assets are part of the pension, not your estate.

How can CT Wealth Management help me?

Our team of qualified pensions experts are here to explore your specific situation and the types of personal pensions and occupational pension schemes that could be beneficial for you. We will talk to you about your retirement goals, your work situation, your attitude to risk, current bank accounts and investments, your family and your long term plans.

The earlier you start planning for retirement, the easier it is to ensure you will have a comfortable and enjoyable future.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

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