Should I Move My SIPP to a SSAS?
Firstly, this is not individual financial advice. If you want to transfer pensions, you should take regulated financial advice.
But the question is, SIPP or SSAS pension? Which is the best? If you’re unsure, it’s important to familiarise yourself with what a SIPP is and what a SSAS is. Then you can work out which option best suits your personal circumstances.
What is a SIPP?
SIPP is a self-invested personal pension scheme. It is an individual contract. A SIPP can purchase commercial property, however there are a limited number of SIPP managers who will actually do that for you.
SIPP generally has access to most regulated funds in the market: stocks and shares, unit trusts, investment trusts, ETF’s, and so on. So, a SIPP does have a reasonable investment base.
However, if you want more from your pension planning, then SSAS should be a serious consideration for you.
What is a SSAS?
SSAS stands for Small Self-Administered Scheme. It differs from a SIPP in that it is an occupational pension scheme and has to be set up by a Limited Company, and an active one at that.
So, you are a Company Director and you’re trying to decide which way to go; SIPP or SSAS? I think it’s important to understand how SSAS could be beneficial, not only to you but also to your business.
The Benefits of a SSAS Pension
There are many benefits of a SSAS pension. Let’s take a look.
SSAS is a Regulated Pension Scheme
SSAS is not regulated by the FCA, it is actually regulated by The Pensions Regulator.
Every SSAS is individually approved by HMRC and the reporting requirements to HMRC are stringent. So, it’s important to have support from our team to make sure everything stays above board.
Multiple Members
One of the key advantages of SSAS is that you can, of course, add more than one member. In fact, you can have up to 11 members inside a SSAS.
We typically find that most of our SSAS’s have 2-3 members. Quite often, a SSAS includes a husband and wife Director team. This is because, by being in the SSAS together, they’re able to work together and pool their funds. This is particularly helpful if they’re investing in a big project, such as buying commercial property.
Watch Video: Can Children be Members of a SSAS?
Purchasing Commercial Property
Buying commercial property with SSAS is an excellent investment option. If you have your trading premises on the balance sheet of your Company and you want to get them into SSAS, because it’s highly tax-efficient, there are several videos we have made about putting commercial property into a SSAS and the tax benefits that come with that. So, we encourage you to check those out.
What you’ll find with SSAS is there’s a pooled funds arrangement that gives you additional purchasing power. It also gives you increased leverage power as well. So, if the SSAS needs to borrow money towards the purchase of their commercial property, you’ve got that increased purchase power; a distinct advantage.
Tax Advantages and SSAS Pension Death Benefits
There are also the long-term planning advantages of a SSAS. For example, if your whole family is included within the SSAS, this allows you to build up retirement funds in one fund. The fund, of course, is completely tax free and exempt from tax on any growth. So, no capital gains tax, no corporation tax, no inheritance tax, and no tax on the death of the member.
Cascade SSAS Funds
SSAS allows you to cascade the pension benefits to your beneficiaries very easily in comparison to SIPP and, again, this is extremely tax efficient. We have made numerous videos about cascading funds within the SSAS in our SSAS Video Hub.
Investment Opportunities
It is fair to say that the breadth of investments that a SSAS can access is much greater than a SIPP. So, if you’re looking for a wider portfolio than just the normal stocks and shares selection of investments, a SSAS could be the solution.
Yes, you can buy stocks, shares, investments, trusts, unit trusts, and more inside a SSAS. But SSAS also has access to things like bonds, private equity, loan notes, and gold. There are all sorts of investments that you can have in a SSAS which you generally can’t have in a SIPP. So, it does give you much greater planning opportunities.
Final Words
At the end of the day, SSAS is very much a business support tool. Not only will it help to build your retirement fund and secure your income in retirement, it will also help your Company manage its taxes along the way, which has to be a great thing.
To find out more about SSAS pensions, visit our SSAS Video Hub or get in touch with us to learn more.
