SSAS Glossary

SSAS

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Adviser. An FSA-regulated independent financial adviser (IFA) can be referred to more simply as an adviser. We are not an adviser and we cannot offer any advice about the SSAS.
Alternatively secured pension (ASP). This is the name given to income withdrawal after age 75. Different limits apply to income withdrawal after age 75. There are also different tax rules for death benefits after age 75.
Annual allowance. This is the maximum amount of new money eligible for tax relief in a single tax year. The annual allowance is set by HMT.
Annuity. An annuity is an income paid for the rest of the member’s life. A member can buy annuities from an insurance company. An annuity can be a fixed amount, or it can increase by a fixed amount or in line with inflation. The member’s husband, wife or other dependants can continue to receive the annuity after they die. The annuity may also have a guarantee period such as five or ten years. See also income withdrawal.

Benefits in kind. When an employer gives an employee something valuable (for example, a company car) it may be treated for tax purposes as if the employee has received cash. If this happens, the item given to the employee is referred to as a benefit in kind and the employee needs to pay income tax on it. Employer contributions to a SSAS are not treated as benefits in kind.

Contracted-out. This refers to contracting out of the State Second Pension or the State Earnings Related Pension Scheme. The SSAS cannot accept any payments in respect of contracted out contributions.

Her Majesty’s Revenue & Customs (HMRC). HMRC is a government department. It decides how much tax relief is available under SSASs. It also decides what rules apply to the benefits the member can take.
Her Majesty’s Treasury (HMT). HMT is a government department. It sets the level of annual allowance.

Illiquid assets. These are assets that can be difficult or slow to convert to cash. Property is a good example of an illiquid asset. Unquoted shares can also be illiquid because there may be only a small number of possible buyers.
Income withdrawal. This means using some of the SSAS assets to provide an income while leaving the rest of the fund untouched. The amount the member can withdraw will fall within maximum and minimum limits. These limits are different depending on whether the member is aged under 75 or 75 and over. See also alternatively secured pension.
In specie contribution. This is a way of moving existing assets into a SSAS without selling the assets. The advantage of an in specie contribution is that it avoids the costs associated with selling an asset. After the in specie contribution, the asset can stay in the SSAS.
Investment return. The difference between the money that is originally invested and the total amount received from that investment at the time it is cashed in. Investment returns can either be positive or negative (in other words, a profit or a loss).
Investment trust. An investment trust is a form of pooled investment which has a limited number of shares. Investment trusts may specialise in particular types of investment (for example, UK shares).

Open-ended investment company (OEIC). An OEIC is a form of pooled investment, similar to an investment trust. OEICs are companies that issue shares on the London Stock Exchange. They then use the money raised from shareholders to invest in other companies. If an OEIC does well, it can issue more shares. This is why OEICs are referred to as being open-ended.

Participating Employer. Means the Principal Employer and any other company that participates in the scheme.
Pension input periods. These are part of the technical method used to limit contributions to a SSAS.
Principle employer. Is the company that establishes the scheme.
Protected Rights. See also the definition for ‘contracted-out’. Protected Rights are the benefits obtained when an individual contracts out of the State Second Pension or its predecessor, the State Earnings Related Pension Scheme.

Quoted shares. These are shares in a limited company where there is a share price published on a recognised stock exchange.

Self invested personal pension. See SIPP.
Shares. If you have a share in a company, it means you receive dividends (part of the profits paid to shareholders) from the company and a portion of any proceeds if the company is sold. You can buy and sell quoted shares on a recognised stock exchange. Unquoted shares are owned by a limited number of people and you are only likely to be able to buy and sell with those people. Shares are more risky in the short-term than some other assets because you only receive whatever is left from a company after it has paid its debts and met other commitments (for example, salaries). If a company does well, its shares can shoot up in value. If a company does badly, its shares can become worthless.
SIPP. A SIPP is a form of personal pension. SIPPs can include a very wide range of investments, can accept transfers including in specie contributions and can be used for income withdrawal. Some SIPPs are fully flexible pension arrangements, while other SIPPs are not so flexible.
SSAS. A SSAS is a form of occupational pension scheme. SSASs can include a very wide range of investments, can accept transfers including in specie contributions, and can be used for income withdrawal. Some SSASs are fully flexible pension arrangements, while other SSASs are not so flexible. It is important to choose a SSAS that meets your needs.

Transitional arrangements. These are special rules that apply to people who already had large pension funds on 5 April 2006. Transitional arrangements may reduce or remove the extra tax charge for large funds. An individual has to register with HMRC to benefit from transitional arrangements.
Trust. A trust is a set of assets and it is governed by rules set out in a document called a trust deed. Trustees make sure that the trust is run in line with those rules.
Trustee. A trustee is an individual or a company with responsibilities to make sure that a trust is run in line with its rules.

UK relevant earnings. This is an earnings limit used to set the maximum contribution that an individual can make and get tax relief for. (The employer may be able to make a larger contribution than this.) UK relevant earnings are broadly the same as a member’s taxed earnings, but they do not include dividends or bank interest.
Unquoted shares. These are shares that do not have a price quoted on a recognised stock exchange. They are not usually suitable investments for SSASs. They are often held by only a few individuals (for example, the founders of a company).

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