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Key Differences between a Group SIPP and a SSAS

We are frequently asked what are the key differences between a Group SIPP and a SSAS?

Below sets out what we feel are the main points.

Eligibility

SIPP

  • Only Financial Conduct Authority (FCA) regulated providers with the appropriate permission can set up a SIPP.
  • Anyone can join a SIPP but members must be a “relevant UK individual” to receive tax relief on contributions.

SSAS

  • A SSAS is not regulated by the FCA.
  • A SSAS must have a sponsoring employer when it is established; this can be a limited company, Limited Liability Partnership (LLP) or other entity as long as they have at least one employee who will join the scheme. There can be multiple sponsoring employers if required.
  • Anyone can join the SSAS by invitation of the trustees; membership is not restricted to employees of the sponsoring employer.
  • Members must be a “relevant UK individual” to receive tax relief on contributions.

Control

SSAS

  • The employer will have certain powers as well as the member trustees.

 

Payments of fees

SIPP

  • These must be paid for from the pension scheme bank account.

SSAS

  • Scheme fees can be paid by either the pension scheme or the principal employer. In a world where the annual allowance is falling this can be a key factor.

 

Loans to the sponsoring employer

SIPP

  • There can be no loans to any connected parties.

SSAS

  • A SSAS can make a loan to the sponsoring employer providing the following criteria are met:
    • There must be a first fixed legal charge of value to cover the loan plus interest.
    • The maximum term is 5 years.
    • Repayments must be in equal annual instalments and cover both capital and interest.
    • The maximum loans must be no more than 50% of the net value of the scheme.
    • Interest rates must be commercial but at least above 1% above the average base lending rate of the 6 leading high street banks.

  

How assets are allocated

SIPP

  • Individual bank accounts are set up along with a master account to deal with joint assets. The assets are all earmarked to individuals. This can be useful if for example the members have differing age profiles and attitudes to risk. If borrowing is required to facilitate a property purchase the lending is to the “scheme” thus keeping fees down.

SSAS

  • The assets are generally pooled which means all members own a percentage share in all assets determined by payments into and out of the scheme. In for example a family situation this can be an advantage since all of the cash could be used to fund one member’s requirements for benefits. In a situation where individuals have differing profiles this can be a disadvantage with a more adventurous member owning the more cautious assets of his co member trustee.

In our experience if the allocation of assets isn’t a major factor and there is a limited company then the preferred route will be SSAS.

To find out how Taylor Patterson can help you please call Kerry Houghton on 01772 550614 or email Kerry.houghton@taypat.co.uk

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