Small Self Administered Schemes. The Self Invested Pension of Choice?
A Small Self Administered Scheme allows savers to diversify their pension money across a wide range of assets, including commercial property, and benefits from generous tax allowances from HMRC. The SSAS market in the UK is worth tens of billions of £s, and following the introduction of pension freedoms in April 2015, the flexibility of a SSAS has seen them grow in popularity. This article looks at just some of the main benefits of a Small Self Administered Scheme.
Benefit 1. A SSAS is an excellent vehicle for funding business growth
A SSAS can be used to purchase shares in a business or grant a secured loan to a business worth up to 50% of the value of the SSAS fund. Neither of these can be done with a SIPP, meaning a Small Self Administered Scheme is an excellent vehicle for funding business growth.
Benefit 2. The Scheme Trustees Model gives control
Members of a SSAS are usually scheme trustees, which means that the members get more of a say in the running of a scheme than would be the case with a SIPP, which operates a sole trustee/operator model. With the latter, for example, SIPP holders who have invested in commercial property can be required to use a property management firm as stipulated by the SIPP operator, often paying higher management charges. This is not the case with SSASs.
Likewise, on the death of a SSAS member, the decision as to where any death benefits are distributed would be that of the scheme’s trustees. The situation in a SIPP is different, as the decision rests with the SIPP operator, who is usually the sole trustee, who is not obliged to take account of the wishes of the SIPP’s members.
Benefit 3. A SSAS gives significant cost savings
A SSAS can be a highly cost-effective solution, especially where there is a shared interest, such as directors who are in business together, or where families are looking to pass on assets to future generations,
The key point is that a SSAS only has one scheme charge, regardless of how many members there are in the scheme. With a SIPP, however, the charges are per SIPP ansd per director, meaning that the charges for a SIPP tend to be higher.
For instance, a purchase of a commercial property by a Small Self Administered Scheme counts as one transaction, with one set of legal fees. Conversely, if a group of directors use their own SIPPs to purchase a commercial property the legal fees will be duplicated, as each director’s share of the property is purchased by their own SIPP, separately.
In addition, because the trustees of a Small Self Administered Scheme can choose their own professional partners and negotiate fees themselves, costs can often be kept lower in this area than via a SIPP.
Benefit 4. Increased investment flexibility
The investments allowed within a self invested pension are determined by HMRC. A SSAS is free from the Financial Conduct Authority’s identification of investments as either a standard asset or a non-standard asset, which gives a SSAS good investment flexibility.
With a SIPP, on the other hand, many operators will not allow non-standard assets to be held, without charging high fees, meaning the investment flexibility of a SIPP is less than for a SSAS.
Contact us for more information on SSAS
These are just some of the benefits of a SSAS. We are specialists in setting up and administering SSASs for our clients. If you are interested in finding out more about what a Small Self Administered Scheme could do for your retirement planning, or call us on 0121 693 0690 for an initial chat.