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What is a SSAS?
A small self administered scheme (SSAS) is an occupational pension scheme, established by a business which appoints the trustees to hold the assets of the scheme for the benefit of the scheme members. The members can be appointed as trustees, they are therefore also investing the funds for their benefit; this is what is therefore mean’t by being self administered. The small bit refers to the fact that the membership must be less than 12.
Do I need a financial advisor?
You will be the member and trustee(s) of the SSAS. You are not compelled to appoint a financial advisor, but to help you make the right choices we recommend that you use one. We will not give you investment advice, nor will we recommend whether a SSAS is best for your circumstances, we can put you in touch with an financial advisor if you wish us to do so.
What are the key benefits of a SSAS?
Ring fencing: A SSAS provides the opportunity for business owners to build up retirement funds in a tax free environment and within a discretionary trust, this keeps the assets ring fenced from the business.
Control: The business owners (as trustees) have complete control over investment choice and unlike a SIPP; assets are registered solely in the names of the member trustees. The requirement for a pensioneer/professional trustee no longer applies.
Tax relief: Business pre-tax profits may be contributed to the scheme and may be tax deductible. The business is not required to allocate the funds to a member at the date of payment; this can provide tax planning opportunities.
Transaction charges: There are no investment charges applied by Pension Practitioner .Com for any transactions made by the Trustees.
Loans: Up to half of the value of the fund may be loaned back to the business, on commercial terms with security.
Borrowing: A SSAS may borrow to acquire assets, for example commercial property purchase at auction or assets owned by the scheme members or the business. The borrowing is limited to 50% of the value of the SSAS, any borrowings in excess of this amount must be held outside the SSAS.
No annuity purchase requirement: You may draw a pension from the scheme from age 55 without the requirement to stop working. The pension may be paid from the resources of the scheme; you are not required to purchase an annuity at any stage.
You might also wish to read the article on: “What a SSAS offers you”. This summarises the most popular reasons people gave on why they chose a SSAS.
Can I wind up my SSAS?
Yes, this is possible. In summary, any money allocated to a member must be transferred to a new pension scheme or an annuity can be secured. Any funds that are not allocated can be refunded back to the business less a 35% tax charge.
How do I go about investing funds?
Most people will have a specific purpose for setting up a SSAS; often it is simply to reduce tax from the business. Once that cash is in the pension bank account, alternative investment of those funds may be required. We will assist in ensuring that the scheme paperwork is correctly completed relating to that investment (but we do not give advice in making or arranging that investment).
You will undertake investments directly where you are investing the funds for yourself, or appoint a financial advisor to select investments appropriate to your requirements.
Do I need a corporate trustee/pensioner trustee to my scheme?
Whilst this requirement still appears on some Government websites, the requirement for a corporate trustee /pensioneer trustee was actually removed on 6 April 2006 as a consequence of pension simplification.
Some pension companies advise that not having a professional trustee creates a greater risk and is more likely to be queried by HMRC. HMRC do not hold a list of pension schemes which have an independent trustee and those that do not, there is no greater or less of a risk than not having an independent trustee.
Am I stuck with a SSAS for life?
In summary, any money allocated to a member must be transferred to a new pension scheme or an annuity can be secured. Any funds that are not allocated can be refunded back to the business less a 35% tax charge. Most SSAS operate on a non allocated funding basis. You are therefore not married to a SSAS for life!
How do you administer my scheme ?
We will obtain from a list of investments undertaken during the scheme year, we will review payments in and out of the scheme and prepare a financial return. We may also prepare other returns depending on the transactions you undertake. We will send this to you for agreement and it will be submitted to HM Revenue & Customs.
During the scheme year, matters arise which your investment providers will require assistance on from the scheme administrator, we will provide them with that information necessary for the pension scheme to conform to certain tax regulations. We will keep you in the loop throughout and also provide you with an end of year report, benefit statement and invitation to renew administration services with us. We will also undertake compliance returns to the Regulator and other bodies to ensure conformity.
How do you monitor if I am doing something wrong?
We will provide you with a fact sheet on what activities will be taxable on your pension scheme. We have prepared this in a way which is clear and simple. We will also give your advisors a copy of this fact sheet.
We will receive copy bank statements and monitor activities undertaken during the scheme year to ensure that you do not unwittingly purchase a taxable asset – such as residential property.
For more information please call us on: Freephone 0800 634 4862
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