SSAS Versus SIPP

For Use By Financial Advisors Only

SSAS Versus SIPP Overview

It is often difficult to determine the key differences between SIPP and SSAS products, and this guide is aimed to assist in the process. Please note: these comments apply only to the Alltrust SIPP and Alltrust SSAS. Other providers in the market place may offer different options within their products.

SSAS Versus SIPP Details

Small Self Administered SchemeSelf Invested Personal Pension
InvestmentsFull flexibility of investments, ranging from equities and unit trusts to more complex investments such as property, unlisted shares and loans.

SSAS can grant secured loans to Sponsoring Employers, but not to other connected parties. Employer shares limited to 5% of scheme value. Subject to taxable property rules.
Full flexibility of investments, ranging from equities and unit trusts to more complex investments such as property, unlisted shares and loans.

SIPPs cannot grant loans to Sponsoring Employers or connected parties. Shares in a member’s company are not limited. Subject to taxable property rules.
MembershipAll members are members of the same Scheme, and enjoy the same rights as each other.

Membership is granted to individuals by the Sponsoring Employer of the SSAS.
Each member has his or her own individual arrangement.

Group SIPPs can be established, whereby all members are members of the same Scheme, and which operates in a similar fashion to a SSAS.
FundingExisting pension benefits from other registered pension schemes can be transferred in.

Contributions can be made by an Employer, or by individual members.

Individual members may need to obtain their own tax relief, depending on how the Scheme is set up.

Contributions can be paid to an unallocated account for additional flexibility, although tax relief is not available until allocation to members.
Existing pension benefits from other registered pension schemes can be transferred in. Contributions can be made by an Employer, or by individual members.

Individual members will obtain basic rate tax relief on contributions, which is applied to the Scheme.

Higher rate taxpayers can reclaim the balance through their tax return, subject to the Annual Allowance.

The Money Purchase Annual Allowance applies for those who have flexibly accessed their pension.
BenefitsMember’s benefits are determined by calculating their share of the ‘pooled’ fund. This is based on the transfers and contributions made on behalf of each member.

Benefits can be drawn in the form of Flexi-Access Drawdown, Uncrystallised Funds Pension Lump Sum, Annuity Purchase and Scheme Pension.

Capped Drawdown only applies to pre-April 2015 cases. All benefits are subject to the Lifetime Allowance
The member is entitled to all of the assets held within their SIPP, subject to the Lifetime Allowance.

Benefits can be drawn in the form of Flexi-Access Drawdown, Uncrystallised Funds Pension Lump Sum, Annuity Purchase and Scheme Pension.

Capped Drawdown only applies to pre-April 2015 cases.
ControlAssets are held jointly by the Professional Trustee and the Member Trustees.

A Scheme Administrator is appointed to deal with various HMRC matters.

The Sponsoring Employer usually has a high degree of control in relation to appointment of Trustees and amendments to rules.
Assets are held jointly by the Professional Trustee and the Member.

A Scheme Administrator is appointed to deal with various HMRC matters.

The Professional Trustee will have the highest level of control in relation to the powers of the Scheme.
LegislationThe Scheme is established as a single Scheme in its own right, and has to be registered with HM Revenue & Customs. It is an occupational Scheme and is subject to Pensions Act and DWP requirements.

The Scheme is not regulated, and there are no requirements to report to the Financial Conduct Authority.
Each Member belongs to a single Scheme, which is already registered with HM Revenue & Customs. It is a Personal Pension Scheme, and is exempt from many Pensions Act requirements.

The Scheme is regulated, and there are requirements to report various matters to the Financial Conduct Authority, and undertake certain regulatory processes.
Fund CalculationEach Member of the Scheme has benefits calculated in relation to the contributions and transfers paid on their behalf.

There is normally no direct allocation to Members of any of the underlying assets, and the Scheme operates as a common trust fund.
Each Member’s SIPP will specifically ‘own’ the assets held within in. In the case of property, for example, this means that joint ownership will result in fixed amounts of the property be

ing held by each SIPP. A Group SIPP operates in the same fashion as a SSAS – i.e. common trust fund.
CostsAs a standalone scheme, set up and running costs are generally higher.

Transactional costs are typically charged on a Scheme basis, which means that the Scheme can be more cost effective where shared assets are acquired, such as property.
Set up and running costs are typically lower than SSAS for each individual.

Where joint assets such as property are held, costs can be greater, as each individual’s entitlement needs to be monitored separately.

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