The Power of SASS Pensions

For many of us, planning for retirement can feel like a distant concern—until it isn’t. We go through life accumulating assets and working hard to build our wealth, but we don’t always think about how to best manage it for the long term. When it comes to pensions, most people assume there’s a one-size-fits-all solution, but that’s simply not the case.

If you’re a business owner, a company director, or an individual looking for more flexibility and control over your retirement funds, a Small Self-Administered Scheme (SASS) pension may be just the solution you’ve been looking for.

A SASS pension gives you more control over your retirement savings and allows you to make decisions that directly impact your financial future. But how does it work, and more importantly, how can it help you grow your wealth?

Let’s break it down.

What Is a SASS Pension?

A Small Self-Administered Scheme (SASS) is a type of occupational pension scheme that offers business owners and company directors the ability to control their pension funds. Unlike traditional pensions, which are managed by a third party, a SASS allows you to invest your pension contributions into a range of assets, including property, stocks, and other investments.

In a SASS, the trustees (which may include you or your company directors) make the decisions about how the money is invested. This gives you a level of flexibility and control that isn’t available with standard pensions. Additionally, there are several advantages to using a SASS pension, including:

• The ability to invest in commercial property, including property owned by your business.
• Enhanced tax benefits, which can be particularly useful for higher earners.
• Greater investment choices, allowing you to invest in a wide range of assets.

Unlike other pensions, a SASS allows you to manage and control your investments in a way that suits your personal and business goals.

Why Should You Consider a SASS Pension?

If you’re asking yourself why you should consider a SASS pension over other retirement savings options, here are a few compelling reasons:

1. Greater Control Over Investments

With a SASS, you have the flexibility to invest in a wider range of assets than traditional pensions. This includes the opportunity to invest in commercial property, which can be an attractive option if you’re already a business owner or have exposure to real estate. A SASS gives you the freedom to decide where your pension funds are invested—whether it’s in property, stocks, or other asset classes.

In other words, you’re in the driver’s seat. If you’re someone who wants to make strategic investment decisions that will directly benefit your financial future, a SASS gives you that control.

2. More Efficient Tax Planning

One of the key advantages of a SASS is the tax relief it offers. Contributions to a SASS pension receive tax relief at your marginal rate, which means that if you’re a higher earner, you’ll benefit from greater tax savings.

For business owners, the pension contributions made by your company are tax-deductible, which reduces your company’s tax liabilities. This makes SASS pensions particularly appealing for those who want to maximise tax efficiency while also ensuring a comfortable retirement.

3. Borrowing Power

SASS pensions have the unique ability to borrow money in order to invest. This is particularly useful if you want to invest in commercial property or expand your business using pension funds. For example, your SASS pension can borrow up to 50% of its value in order to purchase assets—such as property—helping to maximise potential returns.

4. Simplified Asset Consolidation

If you already have multiple pensions or investments spread across different platforms, a SASS can simplify your assets by consolidating them into one scheme. This makes it easier to manage your pension fund and keep track of your overall financial position.

How Does a SASS Pension Work?

Let’s take a look at how a SASS pension operates on a practical level.

Setting Up a SASS

Setting up a SASS pension typically involves the following steps:

• Establishing the scheme: You will need to set up a trust and appoint trustees to oversee the management of the scheme. As a business owner, you may be one of the trustees.

• Contributions: You and your business can make regular contributions to the scheme. These contributions are subject to tax relief, making them a tax-efficient way to save for retirement.

• Investing: Once your funds are in the SASS, you can choose how to invest them. The assets you invest in are up to you, and as a trustee, you can choose investments that align with your goals.

• Tax Benefits: Like other pension schemes, your contributions will benefit from tax relief, and the growth within the pension is generally tax-free. Additionally, you won’t pay tax on income generated from investments, including rental income from property.