Our SIPP vs SSAS

 

In general terms, a SSAS is a pension scheme for (generally small) employers and a SIPP is a pension scheme for individuals.  It might help if we compare the two products for you, side by side.

 

For more information

Download a PDF of our comparison table.

 

 

SSAS

(Small Self Administered Scheme)

SIPP

(Self Invested Personal Pension)

Structure

Occupational pension scheme (multiple members).

The employer must create an individual trust for each scheme.  Members are appointed as trustees of the scheme.

Personal pension scheme (single member).

Commonly set up as a Master Trust by providers.

Trustees

Members are appointed as trustees, who have certain responsibilities.

The SIPP provider normally acts as the trustee, who has certain responsibilities.

Some SIPP providers appoint the member as a joint trustee.

Membership

No legislative restriction on membership.

Anyone can join a SSAS as long as they meet the scheme’s eligibility requirements.

There are usually less than 12 members, typically company directors and key employees.

No legislative restriction on membership.

Anyone can join a SIPP if they meet the provider’s eligibility requirements.

Control

Employer has overall control of the scheme, with the Administrator having day-to-day responsibility.

The trustees (who are all members) make the investment decisions.

The SIPP provider has overall control of the scheme, with the Administrator having day-to-day responsibility.

The member makes the investment decisions.

Investments

Investments are registered in the name of the trustees.

The employer decides which investments are allowable (in the scheme rules).

Investments are registered in the name of the SIPP trustee company (under Master Trust).

The provider decides which investments are allowable (in the SIPP rules).

Property

Investment in commercial property is common.

Investment in residential property would result in tax charges.

As per SSAS.

 

Loans

The employer can take out a loan for the value of up to 50% of the scheme’s net assets. 1st charge security is required.

Loans are not allowed to members or anyone related to them.

There is no limit for loans to unconnected parties.

Loans are not allowed to the members or any person or company related to the member.

There is no limit for loans to unconnected parties.

Borrowing

Up to 50% of the net value of the fund can be borrowed.

As per SSAS.

Shares

Up to 5% of the fund value can be invested in the sponsoring employer’s shares.

If there is more than 1 sponsoring employer, then the total value of shares in these employers cannot exceed 20% at the time of purchase.

Up to 70% of the fund can be invested in any company, if this is acceptable to the SIPP provider.

However if the SIPP invests in a company that is controlled by the member or an associated person, tax charges might be applied.

Annuity purchase

Not compulsory.

As per SSAS.

Income drawdown

Yes, available via flexi-access drawdown and capped drawdown for members who elected this prior to 6th April 2015.

As per SSAS.

Uncrystallised Funds Pension Lump Sum

Allows a payment from the pension fund after the age of 55.  Generally, 25% of the payment is tax-free and the remainder is taxed.

As per SSAS.

Personal contributions

Personal tax claims can secure basic and higher rate relief.

The Administrator can claim basic rate tax relief at source.  A personal tax claim can secure higher rate relief.

Allocation of investment

Investments are not allocated to specific members.  Each member owns a notional share of the non-insured assets.

Investments are allocated to a specific member.

Members can combine their funds to purchase assets together.  If they do so, members will be allocated shares in the assets.

Pension commencement lump sum

Where protection does not apply, typically 25% of the value of the fund.

As per SSAS.

Death benefit rules

Beneficiaries can receive a lump sum, income drawdown benefits or annuity benefits.

As per SSAS.

Note: This information is provided for information purposes only and does not constitute a recommendation, implied or otherwise. You are recommended to take financial advice on transfers to and from any pension scheme.  Xafinity is not authorised to give financial advice.