The Irish retirement regime is one of the most liberal and innovative in the world.  Coupled with that is the fact that over 90% of all businesses in Ireland are small or medium sized enterprises, run by owner-directors.  For the owner-director a Small Self-Administered Pension (SSAP) should be the number one choice for retirement planning. A SSAP is established under trust by a company’s directors. They are the ‘members’ and ‘trustees’ of the pension scheme.

A 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.

A 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. The range of investment options are extensive and include things like: property, structured deposits, direct investment in stocks and shares etc…

Since the introduction of the Finance Act 2004 the trustees of single member SSAPs can now also borrow money in order to invest for the members benefit.

What is it?

A Small Self-Administered Pension (SSAP) is a corporate pension scheme with 12 or fewer members. An SSAP is established under trust by your employer, for your benefit and the benefit of some of your fellow directors and key employees.

Member trustee

You are usually one of 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 or company who are pensions experts and are approved by the Revenue Commissioners to act as a Pensioneer Trustee.

Tax-efficient trust

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

Investments

The member trustees control the funds in their SSAP. The pensioneer trustee must be party to all financial transactions but takes no part in decision making. They only determine whether an investment is allowed under revenue rules.

Here are some examples of what investments can and cannot be made:

Authorised Investments:

Prohibited Investments:

The seller of any asset must be at “arms length” from the scheme and the employer. If the asset is a property the property must be let, and eventually sold, on an “arms length” basis and all rents received must be lodged to a scheme account. Property development is generally not permitted as the Revenue regard this as trading and not investment

*Subject to Revenue rules.

Borrowing to Invest

Following changes in 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.

Base Rules

To learn more about Small Self administered Pensions (SSAP’s) contact Kielty Cashell Financial.

Warning: The value of your investment may go down as well as up.