Workplace pensions are a way of saving for your retirement. Usually, both the employee and employer have to pay into it, with your own contribution taken directly from your wages. SSAS pensions are one example of this.
What is SSAS pension?
SSAS is a type of employer-sponsored defined contribution workplace pension.
They are generally set up to provide retirement benefits for a small group of people. This is normally the company’ s directors and senior or key staff.
However, SSAS can be open to all employees and their family members who don’t work for the employer.
One SSAS pension is allowed per company and only 11 people can become members, so this type of pension is particularly common in small or family-run businesses.
The account will be run by the Scheme Administrator and its trustee, who are both often members of the SSAS.
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Members of an SSAS pension can choose how their pension savings are invested, and even use this money to invest in the company.
If you have an SSAS pension, you could purchase the company’s trading premises and lease them back to the company to make even more money.
You could also, depending on the terms and conditions of the SSAS, lend money back to the company and purchase its shares.
This scheme can borrow money, for example by taking out a mortgage, as long as it is for investment purposes.
The repayments may then be covered by the rental income that the company pays the SSAS.
If the SSAS you are a member of is registered with HMRC, your investments will be tax-free.
The SSAS can be exempt from certain taxes such as Capital Gains tax if it is registered with HMRC.
Contributions to the SSAS will receive tax-relief, with basic rate tax relief being claimed by the SSAS itself and higher rates claimed through the member’s tax return.
Tax relief on personal contributions is calculated at the person’s marginal rate of income tax.
For company contributions, it is calculated at the company’s marginal rate of corporation tax.
Is an SSAS regulated?
One of the biggest benefits of an SSAS is that members of more control over their pensions than they do with other pensions.
To some extent, an SSAS is self-regulating because it is a trust run by trustees for the benefit of its members.
In most businesses that use an SSAS, the majority or all members of the SSAS will be trustees.
Any member of an SSAS can choose to be a trustee, but it isn’t a requirement.
As long as this is the case, the SSAS can regulate itself because the members are deemed to be investing the funds for themselves.
An SSAS is often run by the members for the members, so there are no outside influences from trustees who aren’t members of the scheme.
However, the rules of a SSAS are set by HMRC so there are certain legal responsibilities such as paying any tax owed to HMRC.