What are Small Self Administered Scheme Pensions?

Small Self Administered Schemes (SSAS) are Company pension schemes where the employer will usually make contributions to pension schemes that are provided by the employer for the benefit of the employees. Such schemes are known as Occupational Defined Contribution (money purchase) schemes and are usually taken out for the benefit of company directors or senior employees.

Depending upon the type of SSAS pension, the employer may specify that employees also make a contribution to the pension scheme.

How does a Small Self Administered Scheme work?

An SSAS is set up under trust and is a single fund made up of contributions under a pooled arrangement from a maximum of 11 scheme members who are also the trustees.

The employer will usually make pension contributions. Final benefits received by the scheme member will be dependent upon the fund performance.

Why should I make contributions to a Small Self Administered Scheme?

The major reasons for recommending contributions to SSAS arrangements are the tax relief available on contributions and the tax exemptions available on encashment or retirement when benefits are drawn, such as the 25% of the built up fund as tax free cash. In addition any employer contribution made into a scheme on a member’s behalf will boost size of fund until benefits are taken.

Additionally an SSAS will usually have much wider investment choices than a regular personal pension, including the purchase of commercial property and with certain restrictions can also borrow money.

Nevertheless, there are certain annual contribution limits (annual allowance) which will differ for earners and non-earners and size of built up fund limits (lifetime allowance) to qualify for tax relief or tax exemptions, and fund charges applicable to any of the pension arrangements which must be considered, together with any additional death benefits of the funds and the implications of early encashment due to ill health, fund transfers rules and charges or stopping contributions.

How do I make contributions to a Small Self Administered Scheme?

The first and most important step after you have decided you may want to make employee contributions or changes to an SSAS pension arrangement is to have a discussion with us to provide you with independent financial advice.

If the employer makes contributions on your behalf to the SSAS pension then most of the advice will be centred around what is the most suitable type of pension arrangement is for your particular circumstances in terms of employee contributions.

We then make an application on your behalf to make regular contributions or transfer existing arrangements into a selected fund based on how much you can afford, any contributions being made or were made to all other existing pension schemes or deferred schemes, your personal tax situation and the amount of fund required at retirement, at the acceptable level of risk you are prepared to take to match your needs.

Want to know more?

Talk to one of our qualified financial advisers on 01553 777600 or e-mail us at enquiries@ringassociates.co.uk

Also you may want to read the articles associated with Pensions and Retirement from the Financial Services Authority website at http://www.moneymadeclear.fsa.gov.uk/products/pensions/pensions.html and http://www.moneymadeclear.fsa.gov.uk/tools/stakeholder_pensions/notes_index.html

Also you can download the free booklet ‘Just the facts about pensions’ from the same website at

http://www.moneymadeclear.fsa.gov.uk/pdfs/pensions.pdf

Additionally you can download the booklet ‘Just the facts about retiring soon’ at http://www.moneymadeclear.fsa.gov.uk/pdfs/retiring_soon.pdf

and also the booklet ‘Just the facts about your retirement options’ at

http://www.moneymadeclear.fsa.gov.uk/pdfs/retirement_options.pdf