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SSAPs
 
            

SSAPs

 
 

A Small Self-Administered Pension (SSAP) is a corporate pension scheme with 12 or fewer members. An SSAP is established under trust by an employer, for the benefit of some or all of its directors and key employees.
An SSAP is established under trust by a company’s directors. They are the ‘members’ and ‘trustees’ of the pension scheme. An SSAP provides a tax-efficient environment in which a company’s profits can be invested to provide retirement benefits for directors. As the fund grows it can work for the member and still be free from creditors should the company go into liquidation.

An SSAP gives company directors the opportunity to maximise their pension funds prior to retirement by giving them control over their investments. Unlike other pension schemes the directors can control and  choose their investments and the range of investment options are extensive and include things like: structured deposits, direct investment in stocks & shares and properties. 
 
Member trustee

The members are usually also the trustees of the SSAP. The trustees are responsible for and control all aspects of the SSAP’s investment strategy and payment of retirement benefits. All decisions must be unanimous.

Pensioneer trustee

One of the Trustees must include a professional trustee known as a ‘pensioneer trustee’. A pensioneer trustee is an individual who is a pension’s expert and is approved by the Revenue Commissioners to act as a Pensioneer Trustee. 

Freedom Trust Services Ltd will be the registered administrator of the SSAP on behalf of member trustees, provide all the legal documentation required to set up the SSAP, and seek initial approval from the Revenue and provide ongoing services like annual accounting and actuarial valuations.

Tax-efficient trust

An SSAP is established under trust. This provides the member trustees with considerable tax advantages:

•    Contributions made by the company qualify for Corporation Tax relief
•    Members’ personal contributions qualify for tax relief
•    Investments grow free from Capital Gains Tax and  Income Tax
•    A tax-free cash lump sum can be taken at retirement
•    Balance can be transferred into an Approved Retirement Fund

Investments

The member trustees control the funds in their SSAP. The pensioneer trustee must be party to all investments but takes no part in decision making.

Investment Opportunities                    

Property*                                
Land *                               
Shares in private companies                   
Quoted equities on recognised worldwide stock exchanges   
Gilts, Bonds and Fixed Interest Stocks
Investment Trusts                           
Unit Trusts                       
Insurance company Managed and With Profit pension funds                        
Bank and Building Society deposits
Offshore managed funds
Futures and options
Copyrights

* The seller is at arms length from the scheme and the employer, the property will be let, and eventually sold, on an arms length basis and all rents received to be lodged in the fund. Property development is generally not permitted as the Revenue regards this as trading and not investment

Borrowing to Invest

Following a change introduced by the Finance Act 2004 the trustees may borrow money from lenders to enable them to purchase particular assets, or to otherwise benefit the SSAP in the best interests of the members.

Funding the SSAP

The maximum contribution that can be made to an SSAP in any one year is determined by the actuary appointed by JLT Financial Services Ltd. and a report is provided to the member trustees at outset and every three years after establishing their SSAP.

The ‘actuarial valuation report’ details the maximum contributions that can be made to the SSAP to provide benefits for the members and their beneficiaries. The company’s directors use this information to determine the employer’s normal annual contribution to the SSAP. Special, one off contributions may be made to fund for past service.

There is no minimum contribution.

Members may make personal contributions and get valuable tax relief. This must include any contributions they are contributing to any other occupational pension schemes of the principal employer.  Full details are as follows:-

Age

Employee %

Under 30

15%

30-39

20%

40-49

25%

50-54

30%

55-59

35%

60+

40%

Source: Financial Regulator - 'Pensions Made Easy'

Early Retirement

Members may retire earlier than the normal retirement age, for example upon the cessation of their directorship, with the consent of the company. This can be at any time from age 50 onwards. If early retirement is taken, benefits may be reduced.

Payment of Benefits at Retirement

At retirement, your tax-free cash benefits may be taken by:

•    Transferring the balance in to an Approved Retirement Fund (ARF). The ARF can also hold similar assets to those that    were held in the SSAP
•    An annuity for life can be purchased with the balance of the money
•    Cash which is subject to tax

The range of retirement options available to you will be dependant on your status as a controlling director. Employees who have established an SSAP for Additional Voluntary Contributions will have the option of receiving a tax free lump sum from their main pension scheme and/or the SSAP. All retirement benefits will be subject to Revenue rules and limits.

 
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