Glossary and definitions of SSAS terms and phrases

Glossary and definitions of SSAS terms and phrases clarifying some of the SSAS pension related terms and phrases you may come across when learning about the Small Self-Administered Scheme pension.

Annuity – An annuity is a set income paid for the rest of your life. A pension annuity is bought with all or some of the funds from a pension to provide a regular retirement income.

Annual allowance – A person’s annual allowance is the maximum amount eligible for tax relief in a single tax year. The level of annual allowance is set by HMT (Her Majesty’s Treasury).

Beneficiary – A beneficiary is an individual who is nominated/eligible to receive financial benefits or other benefits. In respect of a SSAS pension scheme, members will nominate beneficiaries to receive benefits from their proportion of the scheme.

Commercial propertyCommercial property is land or buildings intended for use by business and NOT residential property. Residential development land, prior to any property on the land being classed as habitable.

Connected party – There are several examples of a connected party in relation to a SSAS scheme. This could be a relative or partner of a SSAS member or a company owned by them. The company that starts the SSAS is also classed as a connected party.

Corporate Trustee – A Corporate Trustee is a professional, appointed to ensure that the scheme adheres to rules and regulations. This is a responsible position. A Corporate or Professional Trustee is a co-signatory of the scheme assets and can ensure certain investments and actions are prevented, should they have potential to break HMRC rules or have negative affect upon the SSAS.

Defined contribution pension – A defined contribution pension means that funds are paid into the pension pot. Money can be invested and when you retire, what you get depends upon how much you have saved and the results of your investment choices.

Diversification – Diversification means putting your funds into a variety of different investments to spread the risk. Within a SSAS pension, this is even more flexible and investment choices can be diversified even more that with traditional pensions.

Drawdown – From 55, drawdown can be taken from your pension. This means you can take as much or as little as you want. However, it must be understood that your income is reliant upon the performance of your investment choices. You may only take the first 25% tax free.

HMRC – HMRC stands for Her Majesty’s Revenue & Customs. The Government department that regulates tax and tax relief and creates the rules applied to the investments you can make and benefits you can take.

In specie contribution – In specie contribution is the process of moving assets into the SSAS without selling them. This avoids the costs that would otherwise be associated with selling and repurchasing the assets.

Lifetime allowance – The lifetime allowance is the total amount that a SSAS member can accumulate before they incur tax penalties. Once the lifetime allowance is exceeded, tax is payable.

Loanback – The SSAS loanback is a SSAS pension advantage that is allowed by HMRC rules in which you are able to make a loan from the SSAS pension to your company.

Lump-sum – A amount taken from the pension as a single cash payment is known as a lump-sum. Only the 25% of the amount will be tax-free.

Market value – Market value is the price an asset might reasonably be expected to fetch on a sale in the open market.

Member – In respect of a SSAS, a member is an active, pensioner, deferred member or a pension credit member of a SSAS scheme.

Member trustee – Member trustees are members of the SSAS scheme. Trustees are responsible to HMRC and The Pensions Regulator for the SSAS complying with pensions law. For the SSAS to benefit from allowed pension exemptions and tax benefits, all scheme members must be Trustees.

Occupational pension scheme – An occupational pension scheme is a pension scheme established by an employer or employers to provide benefits to, or in respect of, employees.

Pension freedom – Pension freedom was Introduced in 2015 and the pension freedom rules mean that upon retirement, benefits can be taken from the pension as wanted. Prior to these rules, amounts were limited.

Professional Trustee – A professional trustee is a person or company, appointed to ensure that the scheme adheres to rules and regulations. This is a responsible position. A Professional Trustee is a co-signatory of the scheme assets and can ensure certain investments and actions are prevented, should they have potential to break HMRC rules or have negative affect upon the SSAS.

Qualifying recognised overseas pension scheme – A UK qualifying recognised overseas pension scheme is a non-UK pension scheme that satisfies HMRC requirements.

Sponsoring company –  The sponsoring company is the related company to the director setting up the SSAS

Sponsoring employer – The sponsoring employer is the director and employer, or any of the employers, of the company that sets up the scheme

SSAS Administrator – A SSAS must have a scheme administrator. The SSAS Administrator is a formal role, responsible completing HMRC returns and other administration functions and other duties within the scheme.

SSAS Drawdown – SSAS drawdown refers to the withdrawal of income from the SSAS

SSAS Practitioner – A SSAS Practitioner is an advisory only position, appointed to support the setup of a SSAS scheme. This is not a responsible position and ultimate responsibility and liability remains with the SSAS administrator and member trustees.

SIPP – SIPP stands for Self-Invested Personal Pension. A SIPP is a personal pension as opposed to a SSAS, which is a corporate pension scheme.

TLP – TLP stands for The Landlord’s Pension

TPR – TPR stands for the Pensions Regulator. As a corporate pension, the SSAS is regulated by The Pensions Regulator (TPR).

Trust – A trust is a collection of assets, governed by a trust deed and the rules set out within it. Trustees ensure that the trust rules detailed in the deed are adhered to.

Trustee – A trustee is a company or an individual member of a trust. Members have responsibilities within the trust to make sure that trust rules are adhered to.

Unconnected 3rd party loan – Unconnected third party loans are loans to a party who is not related to the SSAS, its members or a company owned by a SSAS member.

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  • I cannot recommend Lewis Jones from the Landlord’s Pension highly enough. His professionalism and knowledge of SSAS’s has been outstanding. He has guided me through the end to end process of setting up a SSAS to transfer my Pension into and has never complained when I’ve sent numerous emails with... Read more

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  • Wouldn't hesitate to recommend there services to open a SASS, massive thanks to Dan, Michelle and Teresa who made the setup seamless, very supportive throughout the whole process.
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