What is a SSAS? Small Self Administered Scheme
The Small Self Administered Scheme (SSAS) for a limited company is a way that you and your fellow directors can have your cake and eat it. These schemes allow you to take complete control of your business pension schemes investments, instead of sitting on the sidelines and letting someone else do the job.
This includes;
- Using your business pension fund, to help you run and expand your business.
- Control over your own pension fund assets.
- Wider than usual investment options which include the ability to purchase and maintain commercial property and land.
- Loans to the company for business purposes to purchase, among other things, plant and machinery.
- Having the ability to vary contributions from year to year, to help in business tax planning.
- Substantial death-in-service benefits which can escape the inheritance tax net.
- Pension payments can be made directly from the scheme up to age 75 rather than from a purchased annuity. This means that the purchase of an annuity can be deferred, giving you an opportunity to wait until annuity rates in general are more attractive. Or there is a change in legislation, removing the restriction of only being able to purchase an annuity.
Since the Inland Revenue formally recognised small self-administered schemes in 1979 the self-invested pension market has grown. Now most forms of pension plans offer a self-invested facility as an alternative to insurance company pension funds.
This facility allows clients to have their pension fund managed individually by their chosen independent investment manager.
Managing a fund to suit a client's circumstances is very important, particularly in retirement, as a client's circumstances and needs change.
A SSAS is designed to give businessmen a way of sensibly providing for their own future, without starving their businesses of cash.
One important thing to remember is; if you are both the trustee and the beneficiary of the SSAS, this can often happen where the directors of a smaller business, have been running their own SSAS.
The pension benefits must be paid out at the rate and amount set down in the terms of the pension contract. Even if this means that the overall pension fund is diminishing in value, due to the amount being paid out of the fund to the beneficiaries being greater than the increasing value of the fund.
Like the SIPP, the SSAS is ideal when transferring your own company's pension funds.
