What is SSAS and SIPP?
Small Self-administered Scheme, also known as SSAS or Self Invested Personal Pensions (also known as SIPP), are pension plans that offer greater investment flexibility than other schemes. These schemes allow members to direct their investments into specific assets. They are often called’member-directed pension schemes’. HM Revenue & Customs (HMRC), refers to them as investment regulatedpension scheme’.
SSASs are small occupational plans where trustees are members. They have the ability to influence and make investments decisions. SIPPs can be used to fund personal pensions and offer more investment options than other registered pension schemes. Both schemes have the same rules regarding benefits and contributions.
How do SSASs are set up?
SSASs are established under trust, and all members will be trustees. Before April 2006, SSAS Schemes had to appoint a pensioneer trustee. These could be an individual or a company that is recognized as a professional in their area. They were responsible for ensuring that the SSAS did not go against the Government’s rules.
How do SIPPs get set up?
SIPPs can be established in the same way as personal pensions, either by trust or deed poll. The Trust-based SIPPs, where the provider acts as trustee, are the most popular and preferred of both types. SIPPs that are insurance-based create a private managed fund where the assets are held under the insurer’s name. All investments must comply with the Financial Services Authority’s allowed linking rules. This means that there is a smaller range of insurance-based investments.
What are the most common types of investments?
Common options for investment under SSAS and SIPP include:
- Futures, options and listed shares/unlisted stocks
- Units in an authorized unit trust scheme
- An open-ended investment company shares
- Hedge funds and Investment trusts
- Insurance company funds – trustee investments plans and offshore bonds, etc.
- Policies for tradeable endowment
- Deposits – in any foreign currency
- Commercial property, land or freehold/leasehold commercial properties are available for freehold/leasehold.
SSAS requires that all members be trustees to make decisions about investment options. The SIPP provider will determine the type of investments that are offered. While some SIPPs will accept any investment, others may be more restrictive. This can sometimes be part of a company’s marketing strategy, with perhaps a simple SIPP. A SIPP that invests in shares and funds is for people who want more control or flexibility. A ‘full SIPP’ is for those who need to make specific investments. A trusted investment consultant is able to help you set up a SIPP/SASS. This requires extensive knowledge and experience.
Different types of overseas pension plans are covered by the Government Pension Tax rules:
- OPS: Overseas Pension Schemes
- ROPS: Recognized overseas pension schemes
- QOPS: Qualifying overseas Pension Schemes
- QROPS: Qualifying recognized overseas pension plans
- RNUKS: Relevant non-UK schemes
It is important to understand all the pension plans before you reach retirement age in order to receive the benefits you are entitled.
