SSAS increase in popularity with Advisers due to the growing popularity of Pension-led funding opportunities.
SSASs have been around since the early 1970s and the market for SSAS is worth c.£26bn, and yet until recently, the perception is that they have been seen as not as attractive as SIPPs. However, the recently introduced Pension Freedoms, along with the growing popularity of Pension-led funding opportunities, has seen an increase in the popularity of SASSs.
In this article we look at just a few of the unique features of SSAS compared to a SIPP.
SASS are Member Directed
All SSAS members are member trustees, whereas most SIPPs operate on a sole trustee model. This means SSAS members have more control over the running of their scheme than in a SIPP; the provider of the SSAS does not tend to stipulate which professional advisers the members can use.
In addition upon the death of a member the decision as to where any death benefits are distributed is ultimately with the Trustees, whilst with a SIPP, the decision would tend to fall on the SIPP provider.
The Allocation of Assets and Lifetime Allowance Planning
A SSAS holds its assets at “scheme” level, which means that no one member has any “right” to a particular asset. In other words, the assets can be held on a “pooled basis” between the members. This compares to a SIPP where the member is the only beneficial owner of the assets, being a single member scheme.
This difference can be useful for exit planning.
As an example, if a SSAS member wishes to exit the scheme, and assuming the scheme holds equal values of property and liquid assets, the Trustees could allocate the liquid assets, to the exiting member based, of course, on the national value of their fund.
A SSAS allows a scheme to “loan-back” up to 50% of the fund as a secured loan, which is a particularly popular reason for establishing a SSAS.
This investment is not permitted within a SIPP, which means a SSAS has more scope to support pension-led funding.
The trustees of a Small Self Administered Scheme are free to select their own professional partners, which means that costs can be kept to a minimum, whilst offering greater control and flexibility with investments.
In particular, a SSAS can offer a cost effective solution for smaller firms, especially where the scheme has two or more members. Only one scheme needs to be set up for the company directors.
The April 2015 changes in death benefits rules, which allow tax-free cascading of both un-crystallised and drawdown funds on death pre-age 75, mean that for family businesses, especially, a SSAS can be a very tax-efficient means of accruing, protecting and finally cascading pension savings between the generations.
When considering SSAS providers, it makes sense to check them for their records on service, technical support, flexibility and clear & competitive charges.
Always factor into your planning that a Small Self Administered Scheme needs to obtain HM Revenue & Customs approval, which can often take up to four weeks, and always ensure that trustees complete a resolution at the outset.
This allows Small Self Administered Schemeto confirm the approach to be taken in certain events, such as a member leaving the firm, and provides a basis for future decision making.
For Help and Advice with SSAS, Talk to Us
At Pensions Management Limited, we specialise in SSAS. To find out more about how we can help, contact us or call us on 0121 693 0690.