Understanding Small Self-Administered Pension Schemes

If you are the controlling director of a small to medium-sized limited company you may be interested in learning more about Small Self-administered Pension Schemes and how they might be suitable for you.

Small Self-Administered Pension Schemes

Small Self-administered Pension Schemes - also known as SSAS' - are private pension schemes that operate as private, self-administered trusts which not only pay policy premiums into insurance companies but also invest funds in other ways such as through property or shares.

Small Self-administered Pension Schemes are intended to provide pensions and other benefits for the small to medium-sized companies' directors. A controlling director is defined as a director who is able to control 20% or more of the company shares.

Small Self-Administered Pension Schemes - Key Factors

The Small Self-Administered Pension Schemes must be a common trust fund.
Small Self-Administered Pension Schemes are set up privately and have nothing to do with insurance companies.
Small Self-Administered Pension Schemes have a maximum of twelve members.
One of the members must be an Inland Revenue-approved professional trustee also known as the Pensioneer Trustee. The Pensioneer Trustee is primarily there is ensure that the investment regulations and tax approval requirements are adhered to and to prevent the Small Self-Administered Pension Scheme being unacceptably wound-up.
Other Trustees in the Small Self-administered Pension Schemes may include the directors, their family members or their key employees.
Only one Small Self-administered Pension Scheme is allowed per company and they can continue to run even if the underlying employer ceases to exist.

Small Self-Administered Pension Schemes - Key Benefits

Control - The Small Self-administered Pension Schemes' assets are not controlled by an insurance company, instead the Trustees maintain complete control.
Investment Freedom - The Small Self-administered Pension Schemes' Trustees are able to exercise greater investment freedom, including investment in shares and government bonds.
Tax Advantages - The Small Self-administered Pension Schemes can provide huge tax savings.
Commercial Property Investment - The Small Self-administered Pension Schemes can invest in land and commercial property. Small Self-administered Pension Schemes may normally borrow up to a total of three times its ordinary annual contribution plus 45% of any existing assets in order to buy a commercial property.