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Many individuals and companies are opting to establish Small Self-Administered Pension Schemes (SSAPS) due to the significant advantages they offer over standard arrangements.
Their benefits include increased control over fund management and investment strategies, the ability to determine risk levels in accordance with changing circumstances, access to cost efficiencies through wholesale investments and the flexibility to invest directly in assets such as property.
These arrangements are particularly attractive to business owners with significant amounts of cash on their balance sheets but little or no provision made for their retirement. Depending on particular circumstances, they may be able to put much of this into a pension fund tax free. Furthermore, many people now move job three or four times in their career and leave pension entitlements behind them. Taking these entitlements in the form of transfer bonds and placing them in their own self-administered structure is a far more efficient use of these funds.
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These schemes require the services of an independent pensioneer trustee who looks after the establishment and administration of the pension and ensures they operate in accordance with the Revenue requirements and the Pensions Acts.
Why Grant Thornton
The Grant Thornton Pensioneer Trustee service can offer business owners, directors and employees the opportunity to manage their own retirement choices with full transparency.
Investing in property
The ability to invest directly in property is especially attractive. This allows an individual to purchase an investment property through the scheme with the fund borrowing up to half of its value. Contributions to the scheme, which attract tax relief at the full marginal rate, pay off the debt while rental income from the property goes back into the fund tax free. All capital gains on the property are also tax free.
The property, as well as all other assets in the fund, can be transferred directly into an Approved Retirement Fund (ARF) tax free on retirement. The rental from the property can then be taken as pension income in order to meet the 4% drawdown requirement without having to sell assets.
Why Grant Thornton
The Grant Thornton pensioneer trustee service can advise on structuring such investments correctly and assist with raising debt where appropriate. We will also ensure that such property investments are made in the context of having a diversified portfolio in the fund.
The Grant Thornton Pensioneer Trustee service can also call upon the advice of the firm’s tax department to ensure that all aspects of client schemes are fully compliant with Revenue rules and guidelines.
See our FSA publications here