SSAS Commentary - SSAS Reinvented

Small businesses are the engine of our economy, fueling growth and employing around 16 million people.

It is critical in these difficult times, that every available lifeline is thrown to SMEs to maximise the chances of survival during this critical period and to create the opportunity to rebuild once this crisis is over.

The business support packages provided by the government are of course to be commended and have been a lifeline for many businesses. But this financial does of course have a limited shelf life.

In this hour of need, it could well be that business owners’ pensions come to the rescue. The Small Self Administered Scheme (SSAS) has been around for nearly 50 years now and its principal advantage is the ability to make loans. Any business owner who has a reasonable pension pot can transfer to a newly created SSAS and benefit from the really flexible funding opportunity that it allows.

Quite simply, a pension pot is transferred into a SSAS and up to half can be made available as a business loan. So transfer in £100,000 to a SSAS. Lend £50,000 to your business.

There are just 5 rules that need to be followed:

  1. The rate of interest must be commercial
  2. The terms cannot be longer than 5 years
  3. Repayment must be in equal capital and interest instalments
  4. A loan cannot exceed 50% of the current fund value
  5. The loan must be secured on a first charge

The security requirement can often be challenging but Morgan Lloyd can exercise some creative thinking enabling all sorts of security options to be considered.

Not wishing to forget the pension fund itself – this funding facility does of course offer the fund a decent return on its investment and allows the pension to grow whilst throwing the business a vital lifeline. What’s more, the loan can effectively be topped up at any time and can be renewed or increased at the end of its term, as long as it stays within the 50% limit.

There is no question that we are currently facing the biggest crisis, both economically and socially since the second world war and the exceptional burden this is placing on small businesses is stark. So it is vital that every helping hand is offered and every option is explored to ensure that this essential part of our economy is able to continue to function and companies are able to have the platform to prosper when we can at last get back to some normality.

We often hear that a SSAS is too complicated, too cumbersome and too expensive. We certainly don’t believe that it is. With Morgan Lloyd at the helm to provide unlimited help and guidance at sensible prices, the SSAS really is a straightforward pension plan to navigate and can now more than ever be an essential lifeline for businesses across the nation. And can then really be the superhero that comes to the rescue!

The information above is based on our understanding of the legislation applicable to UK Registered Pension Schemes, and HM Revenue & Customs rules. It is provided as a summary only and should not be taken as advice - Morgan Lloyd SIPP Services Ltd and Morgan Lloyd Administration Ltd are not authorised to give financial advice and will not be responsible for any decision or action taken as a result of relying on this information. If you are a retail client you should seek financial advice from a financial adviser who is authorised by the Financial Conduct Authority and/or seek guidance from the Government’s Pension Wise service.