Is a SSAS better than a SIPP?
In discussion with Pension Practitioner .com managers. The first of three scheduled meetings. We considered how a SIPP (Self-Invested Personal Pension) could be relevant from a tax perspective, for sheltering properties and other possible investments. However, Pension Practitioner .com stated that there are circumstances, especially for small to medium sized family businesses, when SIPPs chief rival, the SSAS (Small Self-Administered Scheme) is a more cost effective simpler to manage instrument.
A SSAS is best looked at as the occupational equivalent of a SIPP, because it is established by an employer for the benefit of all or some of their employees. Pension Practitioner .com managers explained the member trustees are responsible for the proper running of the scheme, including the making of investment decisions on the scheme’s assets.
I questioned that since ‘pension simplification’ legislation took effect in April 2006, many of the differences between SIPP and SSAS have been annulled with regard to benefit and contribution limits? The SSAS experts at Pension Practitioner .com showed that there are other important differences, of which one needs to be aware. Particularly if investments in property or one needs loans to survive the effects of the credit crunch, are being considered.
Pension Practitioner .com clarified that although SIPPs and SSAS have the same borrowing limit of 50% of the net fund assets, it is invariably simpler to facilitate borrowing on a SSAS, and less risky. This is because of the non-allocation of the scheme’s total assets rather (as with SIPPs) than on those of each individual SIPP fund.
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