How a SSAS worksTo establish a SSAS, a sponsoring employer typically a limited company, is required. The company directors will often be members of the SSAS. All members must be trustees and we recommend there are at least two trustees. A suitably experienced scheme administrator is necessary to run the scheme. The SSAS must be registered with HMRC. Contributions, transfer of existing pensions and borrowing are all ways of funding the SSAS to invest and build a retirement fund. The SSAS trustees jointly control the scheme and choose which assets to invest the pension funds into, deciding when to buy and when to sell. Any actions taken by the trustees are appropriate to the needs of the SSAS and subject to unanimous agreement of all the trustees. The assets that the funds are invested into are owned collectively by the members of the SSAS.
What you can invest inYou can choose to invest your pension funds into an extensive range of assets. Heritage Pensions will typically allow “standard’ investments as defined by the FCA, including:
- commercial property;
- quoted stocks and shares;
- fixed interest securities, loan notes and gilts;
- depositary interests;
- investment trust shares and exchanged traded funds;
- collective investment schemes;
- bank deposits.
Drawing benefitsThe money you’ll get from your SSAS depends on:
- how much has been paid in;
- how investments have performed (they can go up or down);
- how and when you decide to take your money.
- Withdraw a tax-free lump sum from your pension fund.
- Take a variable taxable income, known as ‘income drawdown’.
- Take an uncrystallised funds pension lump sum (UFPLS).
- Buy an annuity.
How to contribute
- Regular payments (by you and your employer)
- Single payments (by you and your employer)
- Transfer of funds from an existing pension.
- In specie transfers from an existing pension i.e. shares or property.
- Borrow money to purchase certain assets.
Tax benefitsA SSAS has the same tax advantages associated with all pensions.
Tax relief on contributions (within limits)All contributions, whether paid by you or your employer, are paid gross. You can usually claim tax relief up to your highest marginal rate on personal contributions via your self-assessment return.
Tax relief on investment incomeInvestment income, other than the tax credit on UK dividends, is free from UK income tax and capital gains tax.
Tax relief on benefitsUp to 25% of your pension fund can be withdrawn as a tax-free lump sum from when you turn 55. In the event of your death, benefits paid to your beneficiaries are usually free from inheritance tax.