Pooling funds is one of the great advantages of SSAS. Here’s an example of how SSAS pooling can be particularly advantageous.
Pooling SSAS Funds: An Example
You can have up to 11 members in a SSAS. But let’s say that we have a Limited Company with four members in the SSAS, with contributions that can be made by the Company for each member.
If you’ve got personal pensions and SIPPS, those can be transferred into the SSAS to increase the overall value that the SSAS holds. In doing so, you have ‘pooled’ funds through pension transfers and are able to utilise everybody’s pension contributions. This gives you increased purchasing and leveraging power.
Can You Transfer Other Pensions Schemes into SSAS?
Buying Assets with SSAS Pooled Pension Funds: An Example
Let’s say that the Directors (a husband and a wife, for example) have decided to go and buy a commercial property. They can’t afford it on their own because they don’t have enough money in their individual pensions. But through SSAS pooling, they can afford to buy it together. Combining their pension funds gives them combined purchasing and leveraging power.
Combined, they have the power to purchase this property. Let’s say the property is worth £500,000 and that the collective value inside the SSAS is £400,000 between all members. This means they’re still short of £100,000. However, a SSAS can borrow money. So, they can approach a lender and borrow £100,000 to go towards the purchase of the property.
Once purchased, the property will go into the SSAS and the tenant (the Directors own Limited Company or a third party tenant) will pay rent into the SSAS. There is no tax on the rent received into the SSAS and if the tenant is your Company, rent paid into the SSAS is a tax deductible expense, thereby saving up to tens of thousands of pounds of corporation tax. In addition, the rent can be used to pay off the debt that has been taken out.
Can a SSAS Pay Off a Mortgage on Commercial Property?
As you can see, through SSAS pooling, members can leverage their position and purchase commercial property worth more in value than they could afford on their own.
Speak with a SSAS Expert
If you would like to discuss pooling your funds inside SSAS, book a call to speak with a member of our team. We’re happy to answer any questions you may have.
For more information about SSAS, check out our SSAS Video Hub.
