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What can an SSAS pension invest in?

A comprehensive guide to Pensions and Investments for Investing in Property

Looking to benefit from the flexibility and control offered by a Small Self Administered Scheme (SSAS)? If so, you’ve probably asked yourself the following question: “What exactly can I invest in through an SSAS?” The flexibility of the scheme is reflected in its numerous investment options — we take a look at them.

As business pension experts, we deal with a vast number of SSAS providers, each of which has its own specific criteria on what types of investments are available to an SSAS investor. As there are a wide variety of options available, it is increasingly important for individuals to create a plan prior to investing in an SSAS, which ensures the most suitable provider is found. With a multitude of investment returns available and differing ways to invest with your SSAS a closer look at some of these options is probably a great place to start.

Property Investment

Over the ages property has often been seen as one of the safest investment options due to its relative solid appreciation value and it is no wonder that property investment remains a popular choice for many a retiree.

In the Office for National Statistics’ (ONS) latest Wealth & Assets Survey for all regions (with the exception of Scotland) the method of retirement saving making the most money for non-retired adults was property and by quite some margin it should be added. So it probably won’t come as a surprise to hear that it’s also a key investment option for those considering an SSAS pension scheme.

Plus, a properly managed SSAS is tax exempt, meaning that you won’t have to pay Capital Gains Tax.

But what are some of the ways a prospective investor can take advantage of these impressive returns?

Property Bonds

First up are Property bonds as a route to property investment for your SSAS pension scheme. Property bonds present a hands-off investment opportunity for the members of an SSAS and allows each member to into a loan agreement on a development project with a property developer. These loans provide the developer with the necessary funds to complete a project before selling or returning the completed project for a return. It is in these returns that members of an SSAS plan will see their investment yield results and typically bonds generally range between one and five years, with returns of between 6% and 12% per annum.

Land and Commercial Property

The second option available for members of an SSAS is investing directly in the purchase of land and commercial property. While it can be tempting to look at residential property purchases as part of an SSAS plan the rules governing which types of property investments can be entered into by members of an SSAS are strictly governed by the HMRC and residential properties do not make the cut. These strict regulations mean that even though a residential property may be functioning in a commercial capacity, such as with HMOS, holiday lets and home offices – they cannot be classed as commercial property within a pension fund.

Business Loans

As many property investors hold incorporated businesses, another route for investment is the securing of a loan from a pension fund into a member’s limited business.This means of investment provides the incorporated business of an investor with the funds to then make residential property related investments and these can be for both property deposits or refurbishment costs. However, it’s worth noting that these loans are also regulated by HMRC rules which must be adhered to when opting for a business loan investment on an SSAS.

Other Investment Options

Although the investment opportunities of property within an SSAS are attractive, there is also a wealth of other investment opportunities for members of an SSAS pension scheme:

  • Equities: The typical stocks and shares found in most standard pension funds
  • Government gilts: These are fixed interest securities, usually offering a low fixed return
  • Corporate Bonds: These are fixed interest securities offered by companies, which typically provide a slightly higher return than gilts
  • Foreign equities: Foreign equities are stocks and shares traded on a recognised overseas stock exchange
  • Authorised unit trusts: These are pooled funds that do not hold residential property
  • Deposit accounts: SSAS pensions can be deposited into an account with any authorised financial institution
  • Hedge funds: These are pooled investments generally made by financial institutions, such as insurance companies and banks
  • Unit trusts: These are equity investment funds generally managed by insurance companies
  • Gold: Members can invest in Investment Grade gold bullion (subject to conditions)
  • NS&I: National Savings and Investments, such as premium bonds considered to be a low risk and low return investment
  • Commercial loans: This includes both secured and unsecured loans to UK limited companies.

In closing; an SSAS is often a preferred choice for those looking to have increased flexibility and control over their pension funds due to the ability to decide exactly where there investment is focused. For this very reason and the fact that property investment is highly attractive in an SSAS, many people tend to move their pension funds from Self Invested Personal Pension (SIPP) schemes and company and personal pensions to an SSAS.

WIth ONS studies showing that 79% of retired households with private pension income having a disposable income that is 1.6 times higher than those without private means of investing in a pension, the options for private pension plans are ever appealing.

If you are looking to achieve greater control over and growth from your existing or frozen pension accounts, an SSAS offers a solution. Its flexibility allows you to make multiple investments, whether you’re looking to invest in stocks and shares, property or gold.

Need specific pension investment advice?

Read our guides on SSAS Pensions:

​Still unsure about something? Please don’t hesitate to contact us about enquiries relating to pensions and investments in property. 

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