Small Self-Administered Pension Schemes (SSASs) can provide a tax efficient means of generating retirement income, especially for directors of owner-managed businesses. Employer contributions to SSASs funds are normally treated as a business expense. They can also be varied annually depending on your company’s profitability and cash flow year-on-year.
Other advantages specific to SSASs are that they can lend funds to the employer, acquire commercial property for occupation by the employer, borrow to assist with property purchase and acquire shares in the employer’s business.
Because members of the scheme are Trustees, this means that for family owned businesses they are creating there own Family Pension Trust. This gives the members more control compared to being a member of a SIPP.
The Financial Services Authority does not regulate Small Self Administered Pension Schemes.
If you wish to get an idea of what you need to contribute to a pension please go to the FSA Pension Calculator.
What the FSA Say
The FSA says: “Your retirement can last 20 or 30 years – maybe longer, so you need to be prepared – you may be living on your retirement income a long time. Try to think about how much income you’ll need. Work out how much you’ll want to spend (using today’s price levels). If you decide to use a pension to save for your retirement, it may be a good idea to start one as soon as possible. If you put it off by just a few years, you could end up with a much smaller pension.
- Find out if your employer offers a pension scheme and whether they contribute to it.
- You cannot take your money out of a pension until you are at least 50 (this is going up to 55 by 2010).
- Many schemes give you a statement each year with details of your possible income at retirement.”
Member of the Association of Member-Directed Pension Schemes
Authorised and Regulated by the Financial Services Authority
(SIB No: 133515)