While not new, small self-administered schemes (SSAS) pensions are seeing a resurgence within business owners’ circles as an alternative source for funding and investment. They offer flexibility that other pension schemes lack, making them suitable for alternative and traditional investment opportunities.
How SSAS Pensions Work
An SSAS is a pension scheme usually set up by company directors and business owners, allowing a small number of senior staff (usually 11 or less) to build a pool of money gradually. An SSAS may also include other workers and their family members. Company directors and business owners are typical contributors to SSAS Pensions, which allow the members (as trustees) to control investments directly. This significant advantage makes SSAS a better option for business owners than the Self-Invested Personal Pensions (SIPPs), which a provider or administrator manages.
SSAS members receive retirement entitlements based on the amount paid to the SSAS, the investment period for each contribution, and the investment growth. At retirement, SSAS members receive up to 25% of their funds tax-free, while the rest is paid as pension.
How SSAS Pensions Open Opportunities
SSASs are pivotal for business and investment-minded trustees who want to grow their financial capacity and retirement fund over time. For business owners, having access to investment markets and funding business loans from SSASs could unlock new opportunities. Here’s how trustees can put SSAS funds to good use.
Commercial Assets
Commercial real estate is an attractive and common way for SSASs to invest, whether through flipping, rentals, healthcare commercial properties, or industrial properties. The UK incentivises this method by removing income and capital gains taxes for such rental income. Business owners can explore this option to purchase or rent properties to serve their businesses and reduce associated costs.
Investing in commercial properties also allows SSAS trustees to tailor assets that meet their goals — for example, buying properties, like cold storage, that appreciate faster than others could lead to significant capital growth within a few years. The trustees can also decide on a short-term and long-term profitability strategy.
Peer-to-Peer Lending and Business Loans
Peer-to-peer (P2P) lending in the UK has grown considerably but is still an underrated industry for investors. The growth of P2P lending platforms and strict regulations make it a relatively safe investment option for SSAS trustees to generate consistent income. The advantages of P2P for business owners include lower interest rates and access to quick structured loans.
These loans are also available to the trustees. They can take loans from their SSAS investment program to invest in their businesses, purchase commercial properties for self-use or rentals, and meet other business needs. This mutually beneficial investment helps business owners enjoy business-friendly loans while growing their SSAS portfolio. Not that loans to the sponsoring business must be 50% or less and must be secured by an asset of
equal value.
Financial Markets and Alternative Investments
Investing in financial markets is another efficient way to use SSAS pension funds. For starters, it is possible to purchase shares of the sponsoring business with up to 5% of the SSAS fund value, and trustees can buy 100% of the shares so long as the value is under that 5%. This unique opportunity can improve returns and help business owners target greater valuations.
SSAS pension funds can also be used to purchase shares of unquoted private companies, property bonds, and the crypto market. Building a crypto portfolio with SSAS funds requires careful planning to comply with HM Revenue & Customs regulations. SSAS trustees can invest in crypto-related companies with indirect exposure to the crypto market and trade crypto ETFs and funds. SSASs can also explore private equity and venture capital funds focused on emerging technologies.
Working with an FCA-registered platform that provides seamless integration, scheme banking support, secure wallets, and portfolio management tools is crucial. Access to liquid markets, low/discounted trading fees, and customer-focused services is vital for the best experience investing SSAS funds in alternative markets.
Advantages of SSAS Pension for Business Owners
Businesses that qualify for certain tax advantages can improve their profit margins in the long run. This is one way that SSAS pensions can help business owners. With UK companies paying 25% corporate tax, SSAS trustees can keep all profits and avoid paying taxes on business returns. This is efficient for small and medium-sized enterprises (SMEs) who struggle with revenue generation. Business owners can also enjoy the flexibility of investing across various markets and passing down their pension funds to their descendants tax-free. This is an efficient way to build and preserve generational wealth without paying heavy taxes.
Why SSAS Pensions Are a Smart Investment Choice
Investing in an SSAS pension fund is an important decision that trustees must make in detail, given the increase in minimum age limits to access the fund. Although traditional investments like commercial real estate are largely profitable, alternatives like stock and crypto portfolios are also excellent options. In 2025 and beyond, trustees can gradually build up funds and enjoy tax-free investments that could be the difference in accessing more money at retirement.
Article by Lisa Nathalie.
