SSAS Pension Eligibility
There are lots of questions about UK pension eligibility, especially when it comes to SSAS. In this article we will look at who can set up a SSAS pension, who can’t, and why SSAS might be the pension solution you’ve been looking for.
Let’s get started.
Who Can Set Up a SSAS?
SSAS can be set-up by Directors of trading Limited Companies. A Company will be eligible to sponsor a SSAS as long as it is actively trading. Please note that a copy of the Company accounts are usually requested as evidence.
In setting up the SSAS, the Company becomes known as the “Sponsoring Employer”, with the Company Director applying being the one to select who to invite into the SSAS.
Can You Set Up a SSAS Pension Without an Employer?
No, you cannot set up a SSAS without a Limited Company. Without an employer, it is not possible to set up a SSAS.
Who is Eligible to Become a Member of a SSAS?
The Sponsoring Employer can add up to 11 Members to the SSAS. These members can be:
- A spouse or partner
- Family members who are/are not employed by the Company
- Company employees
- Family members of Company employees
Most SSASs are set up for Directors and their family members and while non-family members can also be Members of a SSAS, it is not generally recommended. If you would like more on this, a member of our team would be happy to help.
The Benefits of Adding Family Members to the SSAS
SSAS is especially popular for small or family-run businesses as a generational wealth tool. This is because the assets held within the SSAS can be cascaded down through the generations in a tax efficient manner.
Here are just some of the benefits of adding your family members into the SSAS:
- Family members do not need to be employed by the sponsoring employer to become members of the SSAS.
- If the children are employed by the Company, then the Company can make contributions on their behalf. This allows you to start building a retirement fund for your children while they’re young.
- When your Company makes contributions on behalf of your children, it further reduces Company Corporation Tax.
- There is a long-term benefit in that when you die, the value of the benefits held within the SSAS can be cascaded to your children in a very tax efficient manner. SSAS pension death benefits are very generous and ensure your loved ones are provided for after you’re gone.
Please note that children under the age of 18 cannot become members of the SSAS because they cannot legally become trustees and all members of a SSAS are Member Trustees.
Here’s Why SSAS May Be The Choice for You
If you’ve been considering the benefits of SSAS for a while but you need a little more convincing to take that next step, here are some reasons why SSAS might be the right choice for you:
Secure Business Loans
A SSAS could be the right choice for you if you are considering loaning money to your Limited Company. SSAS provides extremely tax-efficient loan opportunities to Company Directors, effectively recycling funds back into the business and making significant tax savings in the process.
Investment Choice
SSAS pensions offer more investment opportunities than most other pensions, including SIPPs. What’s more, you have significantly more flexibility and control over those investments. So, you can make your money go further and truly invest in your retirement.
Pooling Pension Funds
If you’re considering pooling your pension funds with a business partner, spouse, partner, or family member, SSAS could be the most effective way to do so. SSAS really comes into its own when there are multiple members as funds can be pooled to facilitate larger investments such as commercial property purchases.
Flexible Drawdown Options
SSAS offers flexible drawdown options when the time comes for you to retire. You can take your pension as guaranteed income, flexible income, or as an uncrystallised lump sum. This allows you to have flexibility in your retirement planning.
Commercial Property Purchase
If you are the Director of a Limited Company and you’re considering buying a commercial property, SSAS is the most tax-efficient way to do this. Holding your commercial property inside SSAS protects it from creditors and means the rent can be paid as a tax deductible expense.
How Many SSAS Pensions Can I Have?
The Company that established the SSAS can only have one SSAS. However, the employer can establish more than one SSAS for their different employees.
Who is SSAS Not Suitable For?
SSAS is a Small Self-Administered Scheme which means that it may not be suitable for everyone, including:
Those Without an Existing Trading Business
If you have a dormant Company, SSAS is not suitable for you. SSAS is a pension scheme designed for Directors of actively trading Limited Companies.
Those with Limited Funds
Even if you are the Director of a Limited Company, a SSAS may not be suitable for you if your Company is struggling to make profits.
Those Based Abroad
New rules coming into effect prohibit SSAS administrators from residing overseas.
SSAS Specialists
At One Crown Pensions, we have a team of SSAS specialists ready to answer your questions. Book a call with a member of our team and get the ball rolling.
Open a SSAS Today
If you would like to open a SSAS, call us to discuss your eligibility and we can get things set-up for you.
For more information about SSAS, check out our SSAS Video Hub where you will find the best SSAS resources in the country - completely free of charge!
