What is a SSAS pension?
A comprehensive guide to Pensions and Investments for Investing in Property
Are you looking for options to invest for the future? A SSAS (Small Self Administered Scheme) is a type of Occupational Pension Scheme with several advantages.
This type of scheme is an attractive option for investors and business owners because it can be tax-exempt. This includes Capital Gains Tax, so investments in property can generate substantial returns. Contributions to the SSAS also receive tax relief (provided some conditions are met). On this page, we will delve into what SSAS is and how to determine if it is the right option for you.
A SSAS, properly managed, is a tax-efficient retirement plan. In the past, SSAS were set up by directors of limited companies for the benefit of specific employees. Since pension simplification, partnerships and families have also been allowed to start a SSAS. A small number of family members may also join an established SSAS.
Members of a SSAS have more control over investment decisions than is usual for pension schemes. It is possible to invest wisely and make a significant return on your investment.
Who Can Start a SSAS?
A SSAS is trust-based. This means that it is run by a trustee for the benefit of the beneficiaries. In the past, it was necessary to employ a professional trustee. A professional trustee, known as a Pensioner Trustee, makes sure that the SSAS follows regulations laid out by HMRC.
Nowadays, it is possible for a member of the SSAS to act as the trustee. This is known as a Member Trustee.
Much like a traditional pension, a SSAS pension can be invested in various areas including shares, commodities, corporate bonds and gilts, providing investors with a rather attractive array of sources for their pension returns.
What makes a SSAS an attractive option?
One of the most attractive USPs for many investors is the ability to take out a loan from a SSAS which can be injected into their limited company for justifiable purposes. However, there are strict rules on how these loans can be administered. These pension loan rules are set and stipulated by the HMRC.
The maximum loan term is five years
Interest charged on the loan must be at least 1% above the average base lending rate
The loan must be secured as a first charge against an asset (or assets) of at least equal value to the loan, plus the loan interest
The loan cannot be more than 50% of the net value of the scheme assets
Repayment of the loan must be made in equal annual instalments.
If you’d like to invest in property, there are advantages to doing this via a SSAS. As mentioned earlier, a properly managed SSAS is tax exempt, so you do not have to pay capital gains tax.
Coupled with the ability and flexibility to invest in property crowdfunding and loan note property bonds, a SSAS makes for an even more appealing option. The terms of these types of property investments are between one and five years, with a return on investments per annum.
Need specific pension investment advice?
Read our SSAS Pension guides:
- SSAS vs SIPP pensions
- What is a Self-Administered Pension?
- How To Set Up A SSAS pension
- What kind of regulations and protections are there for SSAS?
- What Can an SSAS Pension Invest In?
- What are SSAS death benefits
- HMRC Rules
- SSAS Pensions
- How to find the best SSAS provider
- Can a SSAS buy residential property
- A guide to SSAS Pension scheme Loans
Still unsure about something? Please don’t hesitate to contact us about enquiries relating to pensions and investments in property.
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Highly recommend The Landlord's Pension for opening a SSAS. They are highly professional yet friendly and personable. They are really helpful and keep you informed every step of the way. It's refreshing to pay for a service by a company who actually do what they say they are going... Read moreVicki Prosser29/01/20
Highly recommend The Landlord's Pension for opening a SSAS. They are highly professional yet friendly and personable. They are really helpful and keep you informed every step of the way. It's refreshing to pay for a service by a company who actually do what they say they are going... Read moreVicki Mason29/01/20
Very happy with the service from explaining how things work to setting things up with HMRC and pension transfers, everything has gone as planned and in some cases quicker than expected.
Thank you Dan, Michelle and Teresa for your patience and professionalism in dealing promptly with all our queries.Mei Wong20/12/19
I recently opened my SSAS through The Landlord’s Pension and they have been professional, approachable and efficient throughout. Simon, Teresa and Michelle have all been great in answering my questions and queries and doing their best to ensure the process of transferring over my existing pension has been a... Read moreSteve Brazil08/12/19
The Landlord’s Pension is an expert in this niche sector of financial planning and have been helping clients to invest in property since 2004