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SSAS Pensions simplified
This page aims to answer the question,‘What is a SSAS pension (Small Self-Administered Scheme) and how do they work?’
SSAS stands for Small Self-Administered Scheme. It is a pension, exclusively available to company directors, as dictated by HMRC rules. A SSAS pension is afforded all of the benefits that traditional pensions enjoy, plus many additional benefits. These include the ability to loan to your company, invest in property, combine your own pensions and pool pensions with other members for greater investment power and much more. It is incredibly tax-efficient and can be started at any age; you do not have to be over 55.
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What is a SSAS Pension?
- Director-only pension with full investment control and pension tax benefits.
- Powerful tool for business funding, property investment, and succession planning.
- Designed for tax efficiency, flexibility, and long-term wealth control.
A strategic pension for directors and business owners
A Small Self-Administered Scheme pension (SSAS) is a pension scheme, exclusively for company directors. It is a unique and flexible property and occupational pension scheme, specifically created under legislation for company directors in the UK. If you set up a SSAS pension, you have full access to every type of investment available to SSAS investors according to the rules set out by HMRC. A SSAS fund benefits from all the same tax relief and advantages as a traditional personal pension, such as a tax-free lump sum of 25% at age 55, new contributions of up to £40,000 a year and flexible drawdown.
There are several different investment options available when using a SSAS, but for business owners, this type of pension scheme is also beneficial for investing in commercial property or raising funds for any other aspect of running a company. For family businesses, the SSAS offers great benefits for tax efficiency, succession planning, and business continuity.
The ability to loan to the company using the SSAS loanback facility is especially useful when looking for business funding, cashflow or tax efficiency for the business.
If you are a UK company director looking for an efficient and flexible occupational pension scheme, look no further than a SSAS pension.
A SSAS is a good idea for those looking to build a legacy, grow their business, save tax, protect wealth, invest and diversify their pension funds and generally take control, with ultimate flexibility.
Tax Relief on Contributions
Contributions to the SSAS also receive tax relief (provided some conditions are met). This makes it a powerful tool for reducing your tax liability while building retirement wealth
Key Benefits
- Invest in property
- No upfront fees
- Investment returns
- Loan to company
- Consolidate pensions
- Reduce pension charges
SSAS Beginners
SSAS FAQs
What does SSAS stand for?
SSAS stands for Small Self-Administered Scheme. This is a corporate pension scheme that is managed by trustees of the scheme. It can be set up by company directors. Members of the SSAS can choose how their pension funds are invested. It gives all members of the SSAS scheme more control over their pensions.
How do I make other contributions to a SSAS pension?
Contributions can be paid in as a lump sum or regular contributions. Employer contributions can also be made.
Can I combine multiple pensions into one SSAS pension?
Yes. This is just one of the great advantages of a SSAS pension. Consolidating your current pensions has many benefits, such as increasing your investment funds and choices, reducing costs as there is then only one set of fees/charges, and making your pensions easier to monitor.
Can a family member access my SSAS if I die before drawing funds?
Family members will be able to access a SSAS if a member dies before drawing the funds. The simplest option is to pay a lump sum to a person nominated in writing. Lump sums are typically free from all kinds of tax, including inheritance tax, income tax and pension tax. There is however, an exception: If contributions are made to the SSAS in the two years prior to death, as an attempt to reduce the SSAS member’s estate, this money may be liable for inheritance tax.
Alternatively, the amount can be paid as pension income to a dependant. In this case, income tax must be paid on the amount and the recipient must be a dependant.
If the SSAS member dies before drawing funds and was over 75, the benefits are paid out as if from a drawdown fund.
What is the difference between a SSAS and a SIPP?
- A SSAS is a corporate pension and can have up to 11 members
- A SIPP is a personal pension and only for individuals
- A SSAS is exclusively available to company directors
- SSAS costs are charged per scheme rather than per member
- A SSAS is its own individual trust and can make its own investment choices
- A SIPP is regulated by the FCA and HMRC
- A SSAS is regulated by HMRC and The Pensions Regulator (TPR)
- A SSAS can loan 50% of its funds to the business
- A SSAS can invest in commercial property
- A SSAS can invest in hands-free residential property
What happens if a member of a SSAS dies?
An important question that many ask is ‘What happens if a member of a SSAS dies?’ Family members (and other dependants) can access the funds in a Small Self Administered Scheme (SSAS) if the member of the SSAS dies, but there are restrictions. It’s possible for a lump sum to be paid to a nominated beneficiary completely tax free, making an SSAS an excellent inheritance planning tool — if used properly.
However, this depends on specific circumstances, including whether or not the member has started drawing funds from the SSAS and how old the SSAS member was when they died.
Who regulates SSAS pensions?
A SSAS is regulated by The Pensions Regulator and must abide by rules and regulations set out by HMRC.
One of the great advantages of a SSAS is that members have more control over their pensions than with other pensions. As a trust, investments are made at the member’s discretion for the benefit of its members.
Whilst this partly allows a SSAS to self-regulate, a SSAS is also regulated by The Pensions Regulator. In addition, it must be registered with HMRC and abide by HMRC rules and regulations.
Can other people join my SSAS?
You are able to invite up to 10 additional members to the scheme. Members can include other company directors or employees or family members.
