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SSAS Pensions have been around since the 1970s. They are an amazingly flexible tool that can boost wealth creation. You can use your SSAS to buy commercial property, lend money to your own business and pool resources with partners. Your SSAS can even own the premises that you run your business from. The possibilities with SSAS really are endless.
In the UK, you can’t access the funds in your pension until the age off 55. With a SSAS pension, this is also the case. However, a SSAS pension is a special type of pension with special powers. You can use your SSAS to facilitate wealth creation today.
I have a SSAS pension myself. When I 1st learned about SSAS, it was a massive ‘aha’ moment! I had a decent pension pot from my banking career. However, I was resigned to paying high fees for mutual funds until retirement. With SSAS, I learned how to harness the power of my pension pot and create wealth now. I’ve done some amazing things with my SSAS. I’ve sold property that I already own to my SSAS and released funds. I’ve also used my SSAS to be my own bank, and lent money to my business. SSAS is so flexible. At this point, I’m only getting started!
In this article, I’ll explain what a SSAS Pension is. I’ll talk about the benefits of SSAS Pensions and strategies that people use to create wealth. I’ll also explain how to find a scheme administrator, and not get ripped off. I’m lucky to have an excellent administrator. They charge flat fees with no hidden surprises. If you want to find out more about my SSAS Administrator, then contact me. Email me or call me on +44 7930 322 555.
Please note that I’m not a qualified accountant or Independent Financial Advisor. I’m providing information, based on my experience as an investor, business owner and SSAS trustee. Any financial decision you make is your own, and you must take independent financial advise.
SSAS stands for small self-administered scheme. It’s the most flexible type of pension in the UK. You can do some amazing things inside your SSAS Pension:
- Be your own bank. Lend money to your business
- Buy your company premises. Have your business operate from there
- Buy Commercial Property with your SSAS Pension
- Gain tax relief on contributions you make to your SSAS
- Receive a tax free sum from your pension at the age of 55
- Pool your pension funds with family members and business partners. Up to 11 people
- You SSAS pension is free of Capital Gains Tax, Income Tax, Corporation Tax and others
I provide more details about these benefits in the sections below. However, I’m only scratching the surface of what’s possible with SSAS. I’ve seen business owners do amazing and creative things with their SSAS and create wealth.
One fantastic feature of SSAS Pensions, is that you can own commercial property inside it. I’ve utilised this feature to great benefit.
Prior to setting up my SSAS, I had a decent sized pension from my career in banking. These pension funds were invested in mutual funds, with an average fee of 2%. Once these fees were paid, the growth in my pension pot was extremely limited. Overcharging of fees is a massive problem in the fund management industry.
A SSAS pension can own commercial property inside it – which my previous pensions could not. This is a fantastic benefit of a SSAS. It’s actually more powerful than it seems at 1st glance. I’ve been able to sell property that I already own to my SSAS pension. I was able to release funds from my pension to use today. I still have ownership of the property, but inside my pension. You can also take mortgages out, against property you own inside your SSAS.
One important restriction is that you can’t own residential property inside a SSAS pension. The range of things you can own inside a SSAS is very large, however residential property is excluded.
The below video talks about the benefits of owning property inside your SSAS.
With a SSAS pension, you can be your own bank and lend money to your company. So called “SSAS Pension Loan back”. This is an unbelievably powerful tool to boost wealth creation.
You can loan up to 50% of the value of your SSAS pension to your business. This strategy is extremely popular with property investors. They borrow money from their SSAS to fund property renovations and commercial conversions. This strategy is more powerful than it seems at 1st glance. Development Finance is extremely expensive, rates of 10% are common. With SSAS Pension loan back, you can choose the rate you pay (within limits). You can therefore obtain finance for cheaper, compared to commercial finance. Not only that, any interest you pay goes to your pension, and not an external bank.
You create this amazing circular economy. You use your pension funds to finance property renovations outside your pension. You then repay funds back to your pension with interest and grow your pension pot. So you’ve created wealth inside and outside your pension. You can then repeat the trick in the future.
I’ve talked briefly about the strategies to create wealth with SSAS. Frankly, I’ve only scratched the surface. I’ll now provide more details about different strategies that investors use. There’s so much you can do with SSAS – you’re only limited by your own imagination. You’ll know what is best for your own personal circumstances.
- Be your own bank. SSAS Loan Back to your business
- Sell your business premises to your SSAS. Release funds
- Sell your commercial properties to your SSAS
- Pool SSAS funds with other members
- Facilitate Commercial Conversions
- Provide Bridging Finance
Be your own bank. SSAS Loan Back
This strategy is covered in its own section above
Sell your business premises to your SSAS
This is an extremely powerful strategy to utilise the funds inside your SSAS Pension. You can sell your business premises to your SSAS Pension. If your business premises is worth £300,000, then you release £300,000 to your business straight away. Your business will then pay market rent to your SSAS pension, in order to use the premises.
This strategy is amazing. You have released £300,000 to use straight away. You retain ownership of the property inside the SSAS pension and obtain benefits from ownership. The rent money goes to your SSAS pension pot, which can be used for loan backs or to take money from the age of 55.
Sell your property to your SSAS
This is a strategy that I’ve used. You can sell commercial property that you already own to your SSAS. You then release funds to grow your business.
Pool SSAS with other members
Unlike most other types of pension, SSAS pensions can have more than one member. You can have up to 11 members, and pool your pension pots. You can pool your pension pots with family members and business partners.
In addition to this, your personal funds are protected. So if you contribute 60% of funds to the pension, then you’re entitled to 60% of the value of the SSAS pension pot.
Commercial Conversions are a very popular strategy used by property developers. Old commercial buildings are converted into modern residential property. These strategies are very profitable, as a residential property is often worth far more than the old commercial property. These types of conversions are also encouraged by the UK Government, through permitted development rights.
Hold on a sec! I thought you can’t own residential property inside a SSAS? This is correct, but you can use your SSAS to facilitate the conversion. You can do a loan back from your SSAS to your business, and fund your conversion. You could buy the commercial property inside your SSAS and undertake development work. You can then sell the development from your SSAS, before you complete the conversion to a residential property.
Provide bridging finance
I spoke above about how bridging and development finance is expensive. So you can use your SSAS to fund your business activities at a much lower interest rate.
You can still benefit from bridging finance, by taking the other side of the trade. You can provide bridging finance and earn those massive interest rates. Bridging loans often charge between 1-2% per month, so this is a hugely profitable strategy. You can protect your loan by taking a 1st charge security on an asset.
For your SSAS, you’ll normally work with a SSAS Pension Administrator, who acts as your professional trustee. They’ll ensure that your SSAS pension follows all the rules around compliance, reporting and assets it owns. So how do you find a good SSAS Pension Administrator?
It’s trickier than you might think. It’s not like choosing a bank account, where there’s little differences between different banks. SSAS Pension Administrators vary greatly in quality and in the fees they charge.
It’s imperative that you work with an amazing SSAS Pension Administrator. An amazing administrator will keep your SSAS compliant and boost your wealth creation journey. A bad SSAS Pension Administrator could clobber you with fees and eat up the gains in your wealth.
In this section, I’ll explain what you should look for when choosing a SSAS administrator.
- A SSAS Pension Administrator should charges flat fees
- Choose an Administrator that doesn’t restrict you from certain investments
- Choose an Administrator that’s competent!
SSAS pensions are a very flexible and powerful method to create wealth. Historically, SSAS administrators have been larger companies, who overcharge clients with fees. Fortunately, new entrants have come into the market in recent years.
The level to which some SSAS administrators overcharge is shocking. I spoke to around 15 SSAS administrators before choosing one. Watch out for the administrators that don’t charge flat fees, but instead charge for each piece of work. The below fees are typical of the companies I spoke to
- Fees to transfer pensions into your SSAS
- £3,000 Fees to do a loan back
- £3,000 of ‘advice’ fees to buy a commercial property
- This is on top of the management charge just for having the SSAS pension!
I’ve met investors that have their SSAS with administrators like these. You basically end up destroying the wealth that you’ve created in your pension. Anything you try to do, you end up getting clobbered with fees that you never knew about.
A good SSAS administrator should charge flat fees. The administrator I work with, charges a flat fee. So I have complete transparency over what I get charged.
A flexible administrator
SSAS’s are very flexible. There’s only a small number of things that you can’t hold inside your SSAS. But just because the law allows you to do something, it doesn’t mean that your pension administrator will! Many (most?) SSAS administrators are lazy and will prevent you from holding certain investments, because it’s more work for them.
These lazy companies are often the same companies that charge crazy fees for doing nothing!
For example, you can choose the rate your loan back charges to your business. The minimum rate is the average of the base lending rates of 6 high street banks + 1%. However, I’ve spoken to administrators that require a rate of 12% for loan backs! If your business has to pay 12% for a loan, it makes most investments unprofitable. Administrators like this view SSAS pensions as cash cows, and take them for a ride.
It's important to work with a knowledgeable SSAS administrator, who will allow you to invest in something, as long as the law says yes.
A competent administrator
This may sound obvious, but it’s important to choose a competent administrator. I know someone who chose a SSAS administrator, who promised to charge a few hundred pounds. It turned out to be a nightmare!
The company was clueless. He ended up breaking HMRC’s rules, and getting fined. When he got rid of the company, they took an unauthorised fee for the following two years! He had to take the company to court. To cap it off, other providers refused to manage his pension, as it had non-compliant investments in it.
Make sure to speak to the SSAS administrator before you choose them. Ask them lots of questions. If they can’t answer, or say that you need to become a client 1st, then run a mile. A good administrator will be knowledgeable, and happy to explain.
Who provides my SSAS?
For my SSAS pension, I work with an excellent administrator. I spoke to over 15 companies, before choosing one. They charge flat fees, and they’re flexible. If I want to do something, they’ll find a way to get it done – as long as it's legal. Most importantly, they’re a mid-sized firm and not a large national company. They view me as a person, rather than an account number! If you want to find out more, then contact me. Email me or call me on +44 7930 322 555.
After reading this article, you should know how SSAS Pensions work. You should also know about their amazing benefits. They are an extremely powerful tool to boost your wealth creation journey.
In this article, I’ve explained the phenomenal benefits of SSAS, and the strategies that people use. You can own commercial property. You can lend money to your business - with SSAS Pension Loan bank. Receive a tax free lump sum at the age of 55.
I’ve also explained what to look for, when choosing a SSAS administrator. Be careful of administrators that charge large fees! You don’t need to accept it. There are alternatives out there.