A SSAS is a company scheme where the members are usually all company directors or key staff. A SSAS is set up by a trust deed and rules and allows members / employers, greater flexibility and control over the scheme's assets.
Contributions paid to a SSAS are subject to the same rules as other registered pension schemes. Consequently there is no limit on the level of member contributions but tax relief is restricted to the higher of £3,600 or 100% of UK earnings.
Tax relief is also limited by the Annual Allowance. Contributions made by the employer are also unlimited. Employer contributions are deductible against corporation tax provided that they are wholly and exclusively for the purposes of the employer's trade. If an employer's contribution is over £500,000 more than the previous year, tax relief may be spread.
Schemes with less than 12 members and where all decisions are made unanimously or have an independent trustee, are exempt from the trustees' knowledge and understanding requirements of the Pensions Act 2004 and the member-nominated trustee requirements. If every member of the scheme is a trustee, the scheme will also be exempt from the Internal Disputes Resolution Procedure requirements
Loans can be made to the sponsoring employer but are subject to certain conditions set by HMRC. These include:
- The loan should not exceed 50% of the net market value of the scheme's assets
- The loan should be secured against assets of an equal value by way of a first charge
- The loan's terms should be no longer than 5 years
- Interest of at least 1% above bank base rate should be charged on the loan
The trustees of a SSAS can invest in a broad range of investments, including:
- Commercial property and land;
- UK quoted shares, stocks, gilts and debentures;
- Stocks and shares quoted on a recognised overseas stock exchange;
- Futures and options quoted on a recognised stock exchange;
- OEICs, unit and investment trusts;
- Hedge funds;
- Insurance company funds;
- Bank and building society deposits
- Gold bullion
Shareholdings in the sponsoring employer should not exceed 5%. Shares can also be bought in more than one sponsoring employer as long the total holdings are less than 20% and shares in any one sponsoring employer are less than 5%.
There is no restriction (apart from the self-investment restrictions above) on the percentage of shares which can be held in one company.
If the scheme is deemed to be an investment regulated pension scheme (IRPS), tax charges will apply if the scheme invests in taxable property.