If you are looking for advice on the benefits of a Small Self Administered Pension Scheme (SASS) or you want to transfer your existing pension into a SASS our pension experts can help. Get in touch today or read our guide to SASS pensions below.
Understanding the various pension options that are available can be overwhelming, especially if you are a business owner, self-employed or a landlord. When you have to make arrangements for your own pension, as opposed to relying on an employer to provide you with an appropriate scheme, there are a lot of different decisions you have to make. Many business owners choose to use SSAS pensions to fund their retirement.
So, just what is an SSAS pension?
This guide covers everything you need to know to decide if an SSAS pension is the right choice for you.
SSAS stands for Small Self Administered Scheme, and it is an occupational pension that is set up by a partnership or limited company. It is set up by the directors of a company and is a pension scheme that is run by the trustees, which are often the directors or scheme members.
In some cases, specialist SSAS pension companies can act as trustees. An SSAS pension can have 11 members or less and can give a good level of control over how the pension pot is invested.
SSAS pensions are often compared to Self Invested Personal Pensions (SIPPs), but unlike a SIPP, an SSAS is classed as an occupational pension. This means that they follow slightly different rules and regulations and that both the small business and the members of the scheme can make contributions into it.
There is no requirement for any interaction with any financial institutions or insurance companies to set up and manage an SSAS pension, although some offer services to manage these on a company’s behalf.
Members of an SSAS pension do not have an individual pension pot within the fund. Instead, the scheme’s assets are all held in the name of all trustees. Every member is seen to have a share of the assets, which can be difficult to divide in the event of a fallout.
When an SSAS pension is set up, it is generally to give company directors and key senior staff their retirement benefits. They are set up by the company or by a pension provider and are open to employees and even family members that are not employed by the business.
The main restriction is that there cannot be more than 11 members of an SSAS pension.
These trustees run the pension themselves and have full control over where the money is invested. With an SSAS pension, a director has the flexibility to invest in assets that aren’t generally available from other schemes. This includes purchasing a company’s premises and leasing it back to the company and investing in the business itself.
Both the members and the company can make contributions to an SSAS pension, and each will receive tax relief on the contributions that are made.
Business owners and directors are generally the types of individuals that will take out an SSAS pension. This type of pension can have up to 11 members, and they can be employees or family members of employees as there is no requirement for them to work for the business.
It is common for every member of the SSAS pension also to be trustees of the scheme. This type of pension is a popular choice for business owners who want to fund their business growth because an SSAS can grant loans to the sponsoring company as well as buying its shares.
This gives business owners a range of different ways to invest in their own business and is often a more competitive option than other forms of business finance.
While it is possible for an SSAS to grant a loan to the sponsoring company, this is subject to stringent conditions. This depends on the loan amount, term, repayment scheme, interest rates and security.
There are many reasons why business owners and directors choose SSAS pensions instead of other retirement funding options. Some of the main advantages include:
If an SSAS pension is used to lend money to a business, it is required to charge interest on the loan amount. This is often lower than commercial bank rates and other lending options.
It is also important to be aware of the downsides that come with an SSAS pension:
There are a number of pension providers and companies available that offer SSAS trustee services. This means the responsibility of running the pension can be passed onto a third party.