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Small self-administered scheme (SSAS)

Pension scheme names generally aren’t that exciting but the SSAS is one that suggests a bit of flair and cheek. Unfortunately, it’s a bit more mundane than that. The SSAS can be great if you run your own small company or work for one then you could consider setting up a SSAS for up to 12 people, perhaps the company’s directors and senior staff. In some cases, family members can join even though they may not actually work in the business.

The SSAS offers plenty of choice and flexibility in the ways you can invest your pension money and there’s even more specialised options available than you might find with a personal pension or standard company pension scheme.

Small self-administered scheme principles

  • You contribute into the pension yourself, and subject to certain rules the government puts some money in as well (tax relief). Your company would generally pay in too.
  • The amount of money you get to enjoy from your pension in the future depends on the amounts that have been paid in, how well your scheme performs and how much you have been charged in the meantime.
  • You own a share of the money and investments in the SSAS along with the other scheme members.
  • There’s lots of flexibility on how much and when you choose to take your money in the future, including being able to gift it all to someone else when you die.
  • The investment risk is yours and your pension may not grow by as much as you expect. It is even possible to get back less than you put in, as with any investment.
Self-invested personal pension

How is a SSAS different to other pensions?

If you’re running your own company then having greater control over your pension and retirement planning is a definite appeal. You and your fellow SSAS members could choose from a much wider range of investments, albeit the SSAS can include a similar range of funds to these other types of pensions.

As the name suggests the SSAS is set up and run by the company itself, but most people employ professional advisers to help with the specialised areas of investing, administering the scheme and preparing its annual accounts. The SSAS is overseen by trustees, who are often members as well. They make sure the scheme is properly run and that the scheme’s money is invested suitably. If it’s sounding quite involved then at times it can be.

Amongst the investment options you could include with your SSAS are:

  • Funds which are made up of hundreds, evens thousands of different types of investment in the UK and overseas.
  • Company stocks and shares, which could be for a single company or several different ones.
  • Commercial property and land (but not residential property) which commonly includes offices, company premises and property funds.
  • Lending the company money, perhaps to buy a commercial property.

A SSAS can be used to borrow money, perhaps to raise a mortgage on a property. This is a popular option with company owners who might buy the buildings they use to run their business.

Setting up and running a SSAS is more complicated and costlier than taking out a personal pension or a typical auto-enrolment scheme through your employer. The SSAS providers and advisers often have higher charges than you might see with a personal pension due to the specialised nature of the investments.

Is a SSAS right for me?

If you’re running a small business or work for one then you might think taking more control of your retirement planning makes real sense. On the other hand, if you have a hat full of issues with running your own business then it might be best to steer well clear.

It would be a sensible move to make sure that you and the other members have some experience of investing and are comfortable with making your own decisions before things get underway. And, don’t overlook the fact that the money is pooled in the SSAS. So, individuals can have very different ideas about investing, as well as the timing of when and how they want to retire and therefore withdraw money from the scheme. We all know how plans can change.