What is a SSAS pension?

A SSAS, or small self-administered scheme, is a type of company pension ideal for small companies. The SSAS offers plenty of choice and flexibility in the ways you invest your money. There are even more specialised options available than you might find with a personal or standard company pension scheme.

Who can have a SSAS pension?

A SSAS can be great if you run your own small company or work for one. You could consider setting up a SSAS for up to 12 people, perhaps the company’s directors and senior staff, or if you have a small workforce. In some cases, family members can join even if they don’t work for the company.

How does a SSAS work?

SSAS pensions are a type of defined contribution pension which means that your income at retirement will depend on the contributions made and the performance of your investments. It also gives you more flexibility when it comes to accessing your pension1. With a SSAS:

  • Contributions are made by yourself, the government (through tax relief) and the company.

  • The amount of money you have for the future depends on the amounts that have been paid in, how well your scheme performs and how much you have been charged.

  • You own a share of the money and investments in the SSAS along with the other scheme members.

  • There’s a lot of flexibility on how much and when you choose to take your money in the future, including being able to gift it to someone else when you die.

  • The investment risk is yours and your pension may not grow by as much as you expect. As with any investment, it’s possible to get back less than you put in.

How is it different to other types of pensions?

A SSAS gives you greater control over your pension and retirement planning as you and your fellow members can choose from a wider range of investments. These investments can be fairly similar to the range of funds found with other types of pensions.

Where typically the management of a pension is looked after by the provider, a SSAS is set up and run by the company itself. Most people employ professional advisers to help with the specialised areas of investing, administering the scheme and preparing its annual accounts. The SSAS is overseen by trustees who are often members themselves. They are there to make sure the scheme is run properly and the money is invested suitably.

A SSAS can also be used to borrow money. This is a popular option with company owners who might buy the buildings they use to run their business.

Setting up and running a SSAS is more complicated and costlier than taking out a personal pension and can come with higher charges due to the specialised nature of the investments.

What investment options could be included with a SSAS?

Amongst the investment options you could include with your SSAS are:

  • Funds which are made up of hundreds, sometimes even thousands, of different types of investments in the UK and overseas

  • Company stocks and shares which could be for a single company or several different ones

  • Commercial property and land which often includes offices, company premises and property funds

  • Lending the company money, perhaps to buy a commercial property

How do I know if a SSAS is right for me?

When running a small business or working for one, taking more control of your retirement planning can have a great appeal. However, with all the extra management involved you need to make sure it’s the right option for you.

It’s a good idea if you and the other members have some experience of investing and are comfortable making your own decisions before you set up a SSAS. And it’s important to remember that the money is pooled in the SSAS. It’s likely that people will have different ideas about investing as well as the timing of when and how they want to retire.

1Accessing pension money early isn’t right for everyone as it can leave you with less to live on later in life.

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The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article.