What Is a SSAS Pension?
By Georgia Holmes
Discover what a SSAS pension is, how it works, its benefits and risks, and how business owners can use it for retirement planning, commercial property and more.
If you own a business, your pension could do more than help you prepare for retirement. It could also give you greater control over your investments, help you purchase commercial property and, in certain circumstances, provide funding to your company.
One option worth exploring is a Small Self-Administered Scheme (SSAS). Designed primarily for company directors and selected employees, a SSAS is a type of workplace pension that gives its trustees considerable control over how the scheme's money is invested.
But how does a SSAS pension work, what are the benefits, and is it right for you and your business?
What Is a SSAS Pension?
A Small Self-Administered Scheme (SSAS) is an occupational pension scheme established by an employer for the benefit of its directors and eligible employees.
Unlike a traditional workplace pension, where investment decisions are largely handled by the pension provider, a SSAS gives its trustees greater responsibility for deciding how the pension fund is invested.
A SSAS can have up to 11 members. These are often directors, business owners, family members who work for the business and selected employees. Members commonly act as trustees, meaning they help oversee the scheme and its investments. The word “small” refers to the number of members, not the amount of money the scheme can hold. <Cite refs={["turn895534search0","turn895534search1"]}/>
A SSAS is therefore particularly relevant if you run a limited company and want to take a more active role in your retirement planning.
How Does a SSAS Pension Work?
A SSAS operates as a trust-based pension scheme. The company establishes the scheme, eligible members build retirement benefits through it, and the trustees oversee its assets in line with pension legislation and the scheme's rules.
There are several ways money can enter a SSAS:
Employer contributions: Your company can contribute towards members' pensions, subject to the relevant tax rules and limits.
Member contributions: Members may be able to contribute personally, subject to pension contribution rules.
Pension transfers: Existing pension savings may be transferred into the scheme if the SSAS accepts them and the transfer is suitable.
The money is then invested in assets permitted under pension legislation. The value of the pension will depend on contributions, investment performance, charges and how benefits are eventually taken.
As with other registered pension schemes, tax relief may be available on eligible contributions, and investment returns can benefit from the pension tax regime. However, the rules are subject to limits, and tax treatment depends on individual circumstances. <Cite refs={["turn895534search1","turn895534search4"]}/>
What Can a SSAS Pension Invest In?
One of the main attractions of a SSAS is its investment flexibility. Rather than relying solely on a standard range of investment funds, trustees can consider a broader selection of permitted assets.
Depending on the scheme's circumstances and the applicable rules, investments may include:
Commercial property: Such as offices, shops, warehouses or business premises.
Shares and investment funds: To provide exposure to different markets and asset classes.
Cash and fixed-interest investments: Which may help diversify a portfolio.
Loans to the sponsoring business:…