Bury-based pension trustee and scheme administrator Whitehall has called on pension planners to consider using SSASs rather than Sipps for company directors, business owners and their families, saying the benefits of SSAS are being overlooked.

Whitehall says that for a number of years Small Self-Administered Schemes (SSAS) have been less popular than the more mainstream Self-Invested Personal Pensions (Sipps) but there are plenty of reasons to see SSAS as a suitable retirement savings product for the directors of limited companies. One benefit may be that SSAS is not affected by the forthcoming FCA capital adequacy rules for Sipps.

Among the reasons why it says SSAS may be more suitable than Sipps plans for certain categories of clients are:

A More Secure Legal Structure
A SSAS is a trust established by a company. It is therefore a stand-alone legal entity and is ring-fenced from the company, the SSAS members, the SSAS provider and any other unconnected individuals. There is no co-mingling of assets with other pension schemes. The funds placed into a SSAS are therefore protected from creditors or wrongdoers. A Sipp is one large scheme where each member joins a "master" or "umbrella" arrangement. For this reason, SSAS trustees are not affected by the forthcoming capital adequacy rules which will affect Sipp providers and could lead to significant fee increases, reduced investment choice and a reduction in competition in the market, according to Whitehall.

More Secure Banking Arrangements
A SSAS, as a stand-alone legal entity, has its own bank account operated by the trustees. Its protection under the Financial Services Compensation Scheme is therefore assured unlike Sipps and other personal pensions which operate pooled client accounts. The members of a SSAS can be co-signatories of the bank account if they wish meaning no transactions can be made without their signature.

Pooling Investments
Whenever two or more individuals wish to pursue a consolidated investment strategy it can be easier and cheaper to use a SSAS - one product, one transaction, one fee.
Purchase of commercial property by several members can be easier and cheaper through a pooled SSAS than a group of individual Sipps. Restructuring the percentage ownership between the members is a simple paper exercise and does not involve other members buying-out another member's share and changing the ownership using costly legal processes.

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Passing Investments down Generations
A SSAS can be ideal for passing investments such as property or unquoted shares down through the generations of a business or a family where a sale would be detrimental.

Property Self-Management
Sipp property is usually owned by the Sipp provider's trustee company and they will determine how the property is managed. This is often either by their in-house property team or by an external property management company to whom they out-source the task which involves additional fees. A SSAS is controlled by its trustees who jointly own the property. The terms of the trust deed will normally allow the management of the assets to be delegated to one or more of the trustees which means the members can self-manage the property.

Secured Loans to Sponsoring Employers
Up to 50% of the fund can be lent to a Sponsoring Company at a competitive interest rate of 1% over bank base rate. A first legal charge over non-taxable property must be provided as security.
Loans to unconnected parties can also be made on commercial terms and do not need to be secured.

Shares in Sponsoring Companies
A SSAS can spend up to 5% of its fund on shares in a contributing company and shares in any number of sponsoring companies can be purchased up to a total investment of 20% of the fund. Shares in unconnected trading companies can be purchased. The limit on the investment is 19% of the company which can be purchased between the SSAS, the individual members and any other connected parties. There is no limit on the percentage of the fund that can be spent on shares in unconnected companies. In addition, up to 100% of an investment company can be purchased where its sole asset(s) is an allowable pension investment such as commercial property or intellectual property.
Fees are often lower for several members
SSAS have traditionally been considered as more expensive than Sipps. However, with the equalising of regulations and streamlining of administrative duties, this is often not the case and a SSAS with several members may be equal to or cheaper to operate than a group of SIPPs.

Fees and Pension Payroll can be paid by the Employer
Unlike personal pensions, a contributing employer can pay the fees for the operation of a SSAS. The fees are a deductible expense against Corporation Tax and allow the VAT to be reclaimed.

For Partnerships as well as Limited Companies
SSAS are normally used for directors of limited companies as they are occupational pension schemes. However, a partnership can establish a SSAS provided at least one member is an employee rather than a partner.