Pension Practitioner.Com Blog

SSAS, Pension Schemes

Borrowing from your SSAS Pension fund to aid your company

In the third of my conversations with Pension Practitioner .com, who are the U. K’s leading SSAS provider. I put to them that in the current economic climate many companies may not have surplus fund to put away into pension funds for the future whilst the present is so uncertain.

This notion is out-dated. The managers of Pension Practitioner .com demonstrated that unlike a SIPP (Self-Invested Personal Pension), a SSAS (Small Self-Administered Scheme) may lend a portion of its capital to the sponsoring company.

This is useful for a number of reasons, not least if the company is considering buying plant, machinery or investing in research and development, activities which already attract tax advantages themselves.

The maximum overall loan to the principal and participating employees is 50% of the assets of the scheme, valued at the date of the loan. This is subject to certain stipulations;

• • The loan is secured by first charge on an asset of adequate value.
  • Maximum term of 5 years.

  • Minimum interest rate of 1% above the base lending rate of the six leading high-street banks.

  • The repayment of the loan capital plus interest in equal installments over the loan period. One annual payment may be rolled over for a year.

Pension Practitioner .com clarified that third party loans may be made, but not to member trustees or persons connected to them. Schemes violating this rule, making payments to members or passing assets to members or connected parties outside of the rules will face tax penalties and charges. Advice should be sought before loans, transfers or investments are made.

In practice most decent SSAS administrators will insist on a practitioner being used and many provide one as part of the standard administration fees.

SSAS needs to be carefully considered along side SIPP to determine which is best. The certain fact is SIPP is not the only answer for secure shelter for family companies.

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