Carl Lamb highights ten good reasons to use a SSAS
Unlike a SIPP a SSAS is the only pension that can lend money to a connected business. This is important for three reasons. Firstly it can provide a good return for the pension scheme above and beyond any cash deposit account e.g. say a 7% interest rate. Secondly it can provide a very low cost source of borrowing for the business with a fixed minimum interest rate for five years of currently only 1.5%. Finally if the funds that are borrowed by the business are used wholly and exclusively for business purposes e.g. new computers then a second lot of tax relief can be granted (double tax relief).
2. Common Trust
As an unearmarked or pooled fund a SSAS creates liquidity which is especially important for older members of an illiquid scheme looking to draw benefits. If the main asset of the scheme is say a property then the older members can retire and draw on the rental income leaving the valuable asset intact and without the need to sell it as would be required in an earmarked scheme such as a SIPP.
Every SSAS is individually registered with HMRC and as such the rules on investment and future membership can be determined by the member trustees giving the upmost levels of control especially for families looking to protect and preserve their wealth.
4. Lower professional trustee and scheme administration costs
Most SSAS administrators charge on a scheme basis and as such for a three member or more SSAS the costs are usually lower than operating individual schemes
5. Lower costs and simplicity for syndicated / joint asset purchase
Not only will there be greater simplicity on a common asset purchase such as property or land through conveyancers, banks and other third parties dealing with only one scheme but their will usually be lower costs. For example there will be one property administration charge, one loan agreement, one conveyancing fee and reporting on one scheme only rather than the administration burden of part purchase and individual loans / conveyancing.
6. Increased purchasing power of pooling pension funds
By combining say ten member's pension funds and using leveraging members will have greater purchasing power and can buy and participate in a significantly larger asset purchase.
7. Contaminated Land
Where a property or land is contaminated a SSAS has the flexibility to place a "restriction on title" which means the asset can still be purchased unlike in a SIPP
8. Allocation of future investment growth
When a member is in scheme pension and has been deemed to have secured his pension income, growth from assets can be allocated to other members i.e. children which could help with any tax liability caused by a reducing lifetime limit.
9. Succession Planning
By building family members funds succession planning and the passing of assets to the next generation is made simpler through the use of SSAS
10. Scheme Pension
Which pays a higher income and has more flexibility and tax advantages than capped drawdown is more readily available through SSAS. Very few SIPPs offer scheme pension while most SSAS do.
Carl Lamb is managing director of Almary Green
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