SSAS Pension or SIPP?

A SSAS is an occupational pension scheme which is usually set up by company directors. In most cases, directors want more control over investment decisions relating to their pensions and even more so if they plan to use the pension to invest in their business. The SSAS was created to give business owners more control diversify the range of fund investments allowed. A SSAS is allowed to invite up to 11 scheme members, who can be other employees or family. Each member becomes a trustee which is a requirement under the Pensions Act 1995. Members are joint trustees of the SSAS scheme.

• It is an occupational pension scheme
• Members are usually directors or employees of the sponsoring employer
• Every member has a notional share of the funds, including non-insured assets such as property and Open Ended
• Investment Companies (OEIC), and insured assets, like Trustee Investment Plans
• There is a limit of 11 members.
• A SSAS is regulated by The Pensions Regulator and HMRC.

A SIPP (Self Invested Personal Pension) is a personal pension plan which is usually set up by an insurance company or a SIPP specialist. In this case, a member has greater control over the investments but unlike with a SSAS, does not have to be a trustee. SIPPS are regulated by the FCA and so a financial adviser may suggest a SIPP and offer guidance. There are many asset classes a SIPP can invest in, including property, stocks and shares, a range of funds and investment opportunities, gold, and many more.

If you are a company director, you are likely to be eligible for both a SIPP or a SSAS. However, a SSAS is exclusively available to company directors. A SIPP is regulated by the Financial Conduct Authority. A SSAS is self-governed but its regulation is also covered by the requirement to be registered with The Pensions Regulator and HMRC. It must also abide strictly by HMRC rules and so a professional trustee is strongly advised. This can be arranged by your SSAS adviser.

Anyone can take out a SIPP as long as they meet the eligibility criteria which, due to the higher costs involved in running a SIPP, is usually based on minimum fund size.

• A SIPP is a personal pension plan
• There is the option to invest in non-insured assets, such as property and OEICs as well as insured assets, like a trustee investment plan
• The employer of a SIPP member can contribute to their pension plan and may operate payroll deduction on their behalf.

So, SSAS vs SIPP, SIPP vs SSAS, which pension scheme is the best? Well that depends entirely on who the members are and how much involvement they want in running the scheme. Personal preference comes into play as much as anything else, as well as the objectives you have in mind. Both pensions must abide by HMRC rules to ensure they do not incur tax charges. Both SIPP and SSAS still enjoy the same benefits and tax relief as traditional pensions. It is always advisable to speak to your financial advisor or accountant when looking to transfer your pensions to a SIPP or a SSAS.