Updated: April 08, 2024
SIPPs vs. SSAS
Want to know the differences between a SIPP and a SSAS? Here’s how they compare and which is the best pension for your needs.
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When you’re trying to figure out the best pension set up for your retirement goals, SIPPs (self-invested personal pensions) can provide you with lots of choice and flexibility. But, they’re not the only option available.
One potential alternative is a SSAS (small self-administered scheme) pension. But, each has its own benefits and uses. This guide explains the differences between a SIPP vs a SSAS to help you compare pensions and find the right choice.
Keep reading for all the essential comparison details or click on a link below to jump straight to a section…
The following topics are covered below...
What is a SSAS?
A small self-administered scheme (SSAS) is an occupational pension scheme and is set up by an employer or business owner instead of an individual or a provider. They are often considered as a viable alternative to self-invested personal pensions (SIPPs).
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What’s the difference between a SIPP and a SSAS?
They’re actually very similar in many ways. Both are regulated personal pensions, so the basic rules around SIPP investments, borrowing, and loans – will be the same for a SSAS pension. However, even though the HMRC contribution and tax rules for individuals and companies are the same, the way the rules are practically applied can be different.
Here are some of the major differences between these two types of pensions:
| SIPP (self-invested personal pension) | SSAS (small self-administered scheme) |
| Any UK resident under the age of 75 can open a SIPP | Usually set up by company directors of small businesses |
| SIPPs can only lend to, or invest in, an unconnected party (i.e. not your own company) | The SSAS is jointly controlled and run by the members (trustees), requiring unanimous decisions on investments |
| A SIPP product is controlled by a provider or administrator who is the master trustee and responsible for all HMRC reporting | It can be used more flexibly to purchase commercial property |
| You control your individual SIPP account, but you’re subject to the rules and options of the product provider/administrator | SSASs can make loans to the sponsoring employer of up to 50% of the scheme’s net asset value. |
| Less involvement in the administration aspect compared to a SSAS pension | Even greater flexibility for using the pension in tandem with your business |
| Potentially a cheaper option for individuals or smaller numbers of people, but can have higher running costs | You can use up to 5% of the pension fund to buy shares and invest in your business, potentially owning up to 100% of the company through the SSAS |
| It keeps your pension completely separate from that of your colleagues or family | Upfront costs can be higher, but it depends on the number of members. And, SSAS fees can be a deductible business expense, effectively reducing Corporation Tax in the same way that employer contributions do |
| SIPPs and Group SIPPs can be used to purchase property together, but it can’t be directly linked to your business and members’ portfolios will be completely separate, it’s only the property itself that’s held jointly | The scheme rules usually state the assets are pooled together and members own a percentage of the scheme’s assets as shares |
| Slightly more restrictions on investment choice and usually not able to purchase ‘non-standard’ investments | Sometimes each member has an individual allocation of assets in the pot |
What facility is available under a SSAS but not a SIPP?
One major difference is that with a SSAS, you have the option to loan up to 50% of the net fund value of the pension to your company. The ability to make a loan to your own business is something you can’t do with a SIPP. With a SSAS, you’re also allowed to invest and buy shares in your business, although the amount you can invest is limited to 5% of the pension fund value
Also, buying commercial property with a SSAS creates some interesting opportunities, even compared to using a SIPP or Group SIPPs. For example, you could use a loan from the SSAS to pay for the business premises. And then, lease it to your own company, paying the rent back into the pension fund.
What is best, a SSAS or SIPP pension?
The answer will depend on how you plan to invest and use the pension. SIPPs can be a better DIY pension for individuals. But, a SSAS pension can give company owners and directors greater control, and more flexible options around how the pension pot is used and invested.
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How an expert pensions advisor can advise on which works better for you
Determining whether a SIPP or a SSAS suits your pension needs will depend on your individual circumstances and that of your company. Each will have its own nuanced benefits to suit different people.
The best way to find out which type of pension is right for you, or for your business, is to get some expert advice. Speaking with a specialist pensions advisor means that they can take a complete look at your company and finances, then work out the most suitable and tax-efficient retirement solution.
Guidance from a pensions specialist will mean setting up an arrangement that’s tailored to your specific financial goals. If you’d like to have a chat with an independent pensions expert, just make an enquiry. We’ll introduce you to an experienced advisor for free.
Transferring from one type to the other
It is possible to transfer a SIPP to a SSAS, and vice versa. But, there are some extremely important things to bear in mind. And in both cases, you’d need to get clarity from a specialist pensions transfer advisor before attempting to make any moves.
This can be a complex process and not everyone will facilitate a transfer from a SIPP to SSAS. Partly because scammers have carried out dodgy transfers in the past and it has made SIPP providers more wary.
Transfers won’t be accepted until the SSAS scheme has a Pension Scheme Tax Reference (PSTR) from HMRC, which can be a lengthy process.
Care needs to be taken if you want to make a transfer and advice from a pensions expert is highly recommended.
The biggest obstacle you’re likely to face is if your new SIPP provider is unwilling to accept the transfer of certain investments from the SSAS pension into a SIPP.
Speak with a pensions advisor experienced in both SIPPs and SSAS
The subtle but key differences between a SIPP and a SSAS mean that each type of pension will have its own benefits when you’re trying to make comparisons. The only way to truly find which is best for your situation is to discuss your plans with an independent pensions expert.
We offer a free, advisor-matching service. This means we’ll quickly assess your needs and then introduce you to a specialist financial advisor who can carry out a proper pension comparison.
Just call 0808 189 0463 or make an enquiry. We’ll arrange a free, no obligation chat between you and your ideal pensions advisor today.
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FAQs
It depends on your situation and the commercial property you’re looking to hold. If you want to buy your own business premises, then a SSAS beats a SIPP. Because, a key difference is that you’re not allowed to do this with a SIPP.
This can be possible. However, holding both may not be the most efficient way for you to save and invest with a pension. If you want to find out the best way to arrange your pensions, speaking with an independent financial advisor is the right move to make.
Ask a quick question
We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions. Ask us a question and we'll get the best expert to help.
Tony Stevens
Finance Expert
About the author
Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events.
Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been “Hope for the best, but plan for the worst”, and believes that the biggest impact that an adviser can have on a client’s life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they want their retirement to be.
