At The Landlords Pension we are often asked the questions “which is best?” and “what is the difference?” between SIPP and SSAS pension schemes. Below is a brief explanation of the differences between the two and why someone may consider a transfer to these types of schemes.
One of the main reasons that people consider moving from personal or company pension schemes, in particular when these are historic or “frozen” pensions is for the control and flexibility offered by the alternative pension wrappers such as SIPP and SSAS pensions.
SSAS: Small Self – Administered Scheme:
Available to Company Directors
Can lend to the company
Greater investment flexibility and control
Members are usually trustees
Fixed administration costs regardless of fund value
SIPP: Self Invested Personal Pension:
Open to anyone
Cannot lend to company
More restrictive investment options
SIPP provider is trustee
Potentially higher running costs
A pension that is set up by the directors of a business that want more control over the investment decisions relating to their pensions including the opportunity to use their pension plans to invest in their business. As such, each member of the SSAS is usually a trustee.
The following are features of a SSAS:
It is an occupational pension scheme.
The members are usually employees or directors of the sponsoring employer.
Usually limited to 11 members but, as the name suggests, these schemes tend to be relatively small and many are single member schemes.
A SIPP is a personal pension plan set up by an insurance company or specialist SIPP operator where the member has potentially more control over their investments. Anyone can take out a SIPP providing they meet the provider’s eligibility requirements. These are usually based on a minimum fund size because of the higher costs involved in running a SIPP compared to a standard personal pension.
The following are features of a SIPP:
It is a personal pension plan.
Greater investment control than traditional personal pensions.
Member’s employer can contribute to the pension plan and may operate payroll deduction on the member’s behalf.
A SSAS has more flexibility and choice than a SIPP when it comes to investment, some differences of which are listed below:
Can lend up to 50% of pension fund to sponsoring employers.
Commercial Property and Land
Property Bonds and Crowd Funding
All of the investments allowed in a SIPP as listed below
Open Ended Investment Companies (OEICs)
Exchange Traded Funds (ETFs)
Commercial Property and Land (Dependant on Provider)
The trustees and scheme administrators of a SIPP are usually the SIPP provider alone.
With regard to a SSAS, the member is usually a trustee. We at The Landlords Pension only deal with SSAS providers who also act as Professional Corporate Trustees as this gives the member both the control required as a trustee and the guidance and administrative support given by the scheme administrator, some of the duties of which are detailed below.
The duties of a trustee/scheme administrator include:
Registering with The Pensions Regulator and providing a regular scheme return (unless it’s a single person scheme).
Registering the pension scheme with HMRC.
Operating tax relief on contributions under the relief at source system.
Reporting events relating to the scheme and the scheme administrator to HMRC.
Making returns of information to HMRC.
Providing information to scheme members, and others, regarding the lifetime allowance, benefits and transfers.
Paying certain tax charges.
The decision lies with you. If you wish to take control of your existing or historic traditional pension scheme both the SIPP and SSAS route offers you the facility to do so.
If you are a company director the SSAS option certainly gives you far more control and flexibility including the means to grow your business and/or invest in property in various ways.
If you would like to find out more about how The Landlords Pension could help you grow your retirement fund call us on 020 3907 8400 to speak with one of our experienced consultants.