Glossary · UK
What is Small Self-Administered Scheme (SSAS)?
An occupational defined contribution pension scheme, typically set up by directors of a small or family-owned company, giving members greater control over investment choices, including the ability to lend to the sponsoring employer or buy commercial property.
Full Definition
A Small Self-Administered Scheme (SSAS) is a type of occupational pension scheme, usually established by the directors of a small or owner-managed company, in which the members (normally the directors themselves) also act as trustees and have direct control over how the scheme's assets are invested. This contrasts with most workplace pensions, where an insurer or third-party trustee makes investment decisions within a limited range of fund options, and gives SSAS members far greater flexibility, including the ability to invest in commercial property (such as the company's own trading premises, which the SSAS can then buy and lease back to the business at a market rent) and to make loans back to the sponsoring employer, subject to strict conditions. A loan from a SSAS to the sponsoring employer is permitted, but only if it meets HMRC's conditions: the loan must be secured against an asset worth at least 1.2 times the loan value, carry interest of at least 1% above a specified base rate, be repaid within five years, and not exceed 50% of the scheme's net asset value. Breaching any of these conditions turns the loan into an unauthorised payment, triggering tax charges on both the scheme and the sponsoring employer of up to 55% of the amount involved, making careful structuring and ongoing compliance essential -- SSAS loanback arrangements are one of the more scrutinised areas of HMRC pension compliance work. A SSAS can normally have up to 11 members, all of whom must act collectively as trustees, and multiple family members or business partners can pool their pension funds within a single scheme to increase buying power for larger investments such as commercial property purchases. Because a SSAS carries meaningful administrative responsibility and personal trustee liability, alongside ongoing costs for professional trustee and administration support, it is generally suited to established business owners with reasonably substantial pension funds and a genuine commercial reason -- such as owning the company's premises -- for the additional flexibility, rather than being a routine alternative to a standard workplace or personal pension.