What is a SSAS?
Your complete guide to Small Self Administered Schemes and how they can transform your company's pension strategy.
Understanding SSAS
A Small Self Administered Scheme (SSAS) is a powerful pension arrangement designed specifically for limited companies.
Key Definition:
A SSAS is a company pension scheme where members (typically company directors) are also the trustees, giving them direct control over investment decisions and scheme management.
Unlike traditional pension schemes managed by insurance companies, SSAS puts the power in your hands, allowing for greater flexibility and control over your retirement planning.
Who Can Use a SSAS?
SSAS schemes are specifically designed for certain types of businesses and individuals:
Eligible Companies:
- • Limited companies
- • Limited liability partnerships (LLPs)
- • Small to medium-sized businesses
- • Family businesses
- • Professional practices
Typical Members:
- • Company directors
- • Senior employees
- • Family members of directors
- • Up to 11 members maximum
- • Must be connected to the business
Important Note:
SSAS schemes are limited to 11 members and are typically used by owner-managed businesses where the directors want maximum control over their pension arrangements.
Key Benefits of SSAS
SSAS schemes offer several unique advantages that make them attractive to company directors:
Investment Control
Direct control over investment decisions, including the ability to invest in commercial property, company shares, and other assets not typically available in standard pensions.
Tax Advantages
Company contributions are tax-deductible (up to annual limits), investments grow tax-free, and members can take tax-free cash at retirement.
Property Investment
Unique ability to purchase commercial property (including your business premises) within the pension scheme, with rental income growing tax-free.
Flexible Contributions
Both company and individual contributions are allowed, with considerable flexibility in timing and amounts (subject to annual limits).
Business Loans
The SSAS can lend money back to the sponsoring company (subject to strict rules), providing a source of business financing.
How SSAS Works
Understanding the mechanics of a SSAS helps you appreciate its unique structure:
The Structure:
- 1. Scheme Establishment: Your limited company establishes the SSAS as a trust arrangement
- 2. Member Trustees: Scheme members (directors) become trustees, controlling the scheme
- 3. Professional Advisor: Typically involves a pension advisor for compliance and administration
- 4. Investment Management: Trustees make investment decisions within HMRC rules
- 5. Ongoing Administration: Annual returns, valuations, and regulatory compliance
Contribution Flow:
• Company makes tax-deductible contributions to SSAS
• Individual members can also contribute (with tax relief)
• Funds are invested according to trustee decisions
• Investments grow tax-free within the scheme
• Members access benefits at retirement (typically from age 55)
Investment Options
One of the key advantages of SSAS is the broad range of investment options available:
Traditional Investments:
- • Stocks and shares
- • Government and corporate bonds
- • Unit trusts and OEICs
- • Investment funds
- • Cash deposits
Alternative Investments:
- • Commercial property
- • Company shares (including your own)
- • Gold and precious metals
- • Private equity
- • Business loans
Property Investment Highlight:
SSAS can purchase your business premises, allowing your company to pay rent to your own pension scheme rather than a landlord. The rental income grows tax-free in your pension.
Considerations and Responsibilities
While SSAS offers great benefits, it comes with significant responsibilities:
Trustee Responsibilities:
- • Acting in the best interests of all scheme members
- • Ensuring compliance with HMRC regulations
- • Making prudent investment decisions
- • Maintaining proper records and reporting
- • Arranging annual scheme valuations
Costs and Administration:
- • Setup costs (typically £1,500-£3,000)
- • Annual administration fees (£500-£1,500)
- • Professional advisor fees
- • Investment management costs
- • Regulatory compliance expenses
SSAS vs Other Pension Options
Understanding how SSAS compares to other pension options helps you make the right choice:
| Feature | SSAS | SIPP | Company Pension |
|---|---|---|---|
| Control | High (member trustees) | Medium (self-directed) | Low (provider managed) |
| Property Investment | Yes | Limited | No |
| Business Loans | Yes | No | No |
| Member Limit | 11 | Unlimited | Unlimited |
Is SSAS Right for You?
Consider SSAS if you:
- • Are a company director of a limited company
- • Want maximum control over your pension investments
- • Are interested in property investment through your pension
- • Have a small group of directors/family members (≤11)
- • Want the ability to lend to your business
- • Are comfortable with trustee responsibilities
Look elsewhere if you:
- • Want a simple, hands-off pension solution
- • Have more than 11 potential members
- • Are not comfortable with administrative responsibilities
- • Prefer low-cost, simple investment options
- • Don't have a limited company structure
Ready to Explore Your Options?
Whether SSAS is right for you or not, Delphina can help you plan the optimal pension strategy for your circumstances.