SSAS Pensions
A SSAS pension is a revolutionary tool that could help you access remarkable levels of compounding wealth. If you’re exploring SSAS for the first time, it might feel a little overwhelming. At SSAS Alliance, we’re here to support, educate, and guide you towards using your SSAS in the best possible way. In this article, we will give a brief overview of what a SSAS is, who can have one, and what its benefits are to help you decide if a SSAS is right for you.
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What is a SSAS?
A SSAS is a unique type of pension vehicle specifically for business owners and entrepreneurs. SSAS pension schemes are often called a director’s pension or a partner’s pension. SSAS stands for ‘Small Self-Administered Scheme’.
SSAS pensions aren’t very well-known and can sometimes be confused with a SIPP (Self Invested Personal Pension). However, the two are quite contrasting. A SIPP is a personal pension with only one member. A SSAS is an occupational scheme that is established by a sponsoring or principal employer but usually has multiple members. A SSAS tends to be made up of 12 members, also known as trustees.
SSAS pensions are unique thanks to their flexible nature, giving greater freedom to trustees to invest their money into their businesses. As well as this, one of the most attractive benefits of a SSAS pension is that they are entirely tax-free. Therefore, they are an extremely tax-efficient way of extracting profits from your company whilst saving for retirement.
Who can open a SSAS?
To open a SSAS, you must be a genuine, trading business owner. This is usually somebody with a good pension who wants to access it to build wealth independently, in addition to their company. At SSAS Alliance, we meet numerous business owners who aren’t aware that this might be an option for them.
You can also open a SSAS if you are a property owner who has, or is ready to create, a legitimate business. As a property owner or developer, accessing your pension through a SSAS could be transformative for your wealth for generations to come.
A SSAS pension can generate longstanding wealth for your family. Once established, you can invite your family, for example your spouse and children, into your trust. When you pass away, the SSAS trust continues and therefore continues to provide wealth for your family without concerns around hefty inheritance tax.
What are the benefits of a SSAS pension?
A traditional pension has a level of disconnect. You absently contribute to it with the mindset of forgetting about it until you are 65! A SSAS pension aims to reconnect you with this valuable asset, providing access to huge returns on investment.
A SSAS puts you in control of your pension, giving you access to your funds before you reach your pension age. As a business owner, this control is invaluable as it allows you to decide where, when and how you invest.
For example, your business can borrow money from your pension fund for any legitimate purpose. This means that no matter what your business does, your SSAS can be utilised to help your business advance and grow. Other uses for your SSAS pension might include investing in commercial property.
A SSAS pension also offers freedom in how it is managed. As a trustee, you and your fellow trustees choose where to invest the funds. You will also be responsible for deciding who will administer financial proceedings. This puts you in complete control over your costs, without the need for an advisor or fund manager.
With this freedom and control comes an increased potential return on investment, helping you build wealth in a way that no other pension can.
There are very few restrictions on a SSAS pension. One limit is that a SSAS pension does not allow you to purchase personal assets such as a car or a watch. You are also not able to purchase residential property directly using your SSAS pension.
We hope that this article has given you an introduction to SSAS pensions, what they are, and how they might benefit you. For further educational opportunities from experienced SSAS trustees, consider becoming a member of SSAS Alliance. For £500 (+VAT) per annum, you’ll gain access to the largest, growing portal of educational SSAS training tools. You’ll also obtain free access to regular webinars, Q&As, and conferences, all invaluable opportunities to network, ask questions, and enhance your understanding of how SSAS pensions work.