The short answer to this question is, yes you can have both. There are actually no restrictions in the UK on the number of pensions that any one individual can hold.
The issue is arguably what’s more pertinent. Whilst there is no limit to the amount of money that you can hold in pensions, there is a limit to tax free cash. So, actually having all your pensions in one does make the long-term management of said pensions much easier.
SIPP vs SSAS: Let’s Take a Closer Look
While you can have both a SSAS and a SIPP, it’s not necessarily the best or even the most convenient way to do things. Let’s discuss the differences between SIPP and SSAS in a little more detail.
What is a SIPP?
SIPP stands for Self-Invested Personal Pension. It is a pension scheme regulated by the FCA and is an individual contract. This means only you can be a member of the SIPP and nobody else.
When it really came into its own, SIPP was actually a very good product because it allowed money to flourish and do what it was supposed to do. However, in the last 10 years mostly due to regulatory action, SIPP has become very restrictive.
Investing Inside SIPP
SIPPs are generally fairly limiting in what they can do. SIPPs, for the most part, only buy what we would call regulated investments, so stocks and shares and that sort of thing.
SIPPs can, of course, buy commercial property. However, you do need to be very careful when you’re looking at the SIPP because not all SIPP managers will allow you to buy commercial property and there are also some SIPP managers who will not allow you to borrow money inside SIPP.
What is a SSAS?
SSAS is a Small Self-Administered Scheme. It’s a pension designed for Directors of Limited Companies looking to grow their wealth for retirement and invest back into their business to support its growth.
What Can a SSAS Invest in?
If you want a wider range of funds to choose from in the market, SSAS offers all the regulated funds that are available both at home and abroad. So, it does have a broad base of investments.
The Benefits of SSAS
SSAS offers many unique advantages over SIPP, including:
Multiple Members
You can have more than one member inside SSAS. In fact, you can have up to 11 members inside SSAS.
Pooled Funds
The ability to have multiple members within SSAS is particularly helpful if you are looking to buy commercial property. For example, you might find that you don’t have sufficient funds on your own to buy the commercial property you want to acquire. By bringing your spouse, children, and other business partners into the SSAS, the SSAS can act as a pooled fund. This increases the overall value of the SSAS, allowing for increased leverage.
Loans to Sponsoring Employer
Many people open a SSAS because SSAS can lend money back to the sponsoring employer, providing those funds are required to help develop the business. In contrast, SIPP is not permitted to make loans back to the sponsoring employer. This restriction causes many people to choose SSAS over SIPP.
We do have separate videos on loans to the sponsoring employer, if that’s of particular interest to you. You can discover these in our SSAS Video Hub.
A SSAS Can Borrow Funds
Don’t forget that SSAS can borrow money. It can borrow up to 50% of the net scheme assets held inside the pension. That is also true of SIPP, but again you will need to check with the SIPP Manager to make sure they are happy. When it comes to borrowing funds, with SSAS it's straightforward.
Find Out More About SSAS
SSAS is a great product. It’s incredibly flexible and the range of investment choices within SSAS is much wider than SIPP these days. So, you have a greater variety of investments to help build and plan your retirement and make the most out of your pension funds.
To find out more about SSAS and the advantages it offers, visit our SSAS Video Hub or book a call with a member of our team. We would be delighted to share the benefits of SSAS with you.
