SSAS
Client Scenario
Peter and Jane want to retire from running their successful business
Directors of a successful company wish to retire and have their son and
daughter-in-law take over the business’ affairs. A Rowanmoor SSAS provides
the required liquidity to enable payment of their retirement benefits whilst
securing the future of the business.
• Husband and wife in their late 60s run a successful business.
• Both are considering retirement.
• The business premises are owned by their two self-invested personal
pensions (SIPPs).
• There is outstanding borrowing of £85,000.
• The son and his wife will take over running the business.
• They do not wish to sell the business premises.
• Fund liquidity is required to meet payment of pension benefits.
Small Self-Administered
Scheme (SSAS)
Common trust SSAS enables
members to pool funds.
Funding for new SSAS
Peter and Jane use their combined £90,000 in their SIPP bank accounts to pay off the
existing borrowing of £85,000.
Cash
Property
Peter
£ 45,000
£ 182,500
• Assets held do not have to be sold
to pay pension benefits.
Jane
£ 45,000
£ 182,500
• There is increased borrowing
potential.
SIPP funds
• The choice of investments
is flexible.
• Succession planning
opportunities for investments
and death benefits.
• Comprehensive, flexible benefit
options enable retirement income
to be phased.
• Provides flexi-access drawdown,
scheme pension and uncrystallised
funds pension lump sum.
• The SSAS can provide cash to
inject back into a business as a
secured loan.
• Rental income from property
investments will boost scheme
liquidity.
• Administration is of a truly
bespoke nature and each scheme
has a dedicated administrator.
Less borrowing
-£ 85,000
£ 5,000
Total SIPP funds to transfer to SSAS
£ 365,000
£ 370,000
Bringing in Ben and Judy as additional members to the scheme increases the total value
of the SSAS.
Transfer
Ben
£ 120,000
Judy
£ 55,000
Contribution
Total
£ 120,000
£ 40,000
£ 95,000
Total cash value
£ 215,000
Total SSAS value
£ 585,000
SSAS funds breakdown
Property assets
£365,000
Cash
£220,000
Total assets
£585,000
Total value of the SSAS is £585,000. Peter and Jane transferred £5,000 cash
following the repayment of existing borrowing, and Ben and Judy transferred
£215,000 cash in total. The property assets are worth £365,000.
Using the totals transferred into the new SSAS scheme, Peter and Jane will
each be able to take a pension commencement lump sum of £46,250,
totalling £92,500.
Meet Peter and Jane
Peter and his wife Jane are the directors of Portman Fashion Limited, a successful company for over twenty years. They
are both in their late 60s wishing to reduce their involvement in the business’ affairs and to plan for their retirement.
They need liquidity within the pension fund to enable payment of their respective pension commencement lump sums
and ongoing benefits upon retiring. Their son Ben and his wife Judy will take over the business.
The business premises are owned by Peter and Jane’s SIPPs, holding a total value of £365,000 and having outstanding
borrowing of £85,000. In addition, each of the SIPPs has £45,000 in the bank account and receives net income of
£29,500 per annum after charges and deductions for rent. Ben and Judy are currently not financially able to buy the
business premises that are the assets of the SIPPs.
Following a meeting with their financial adviser, Peter and Jane are advised to transfer their existing SIPPs into a SSAS,
and bring in their son and daughter-in-law as additional members. The funds can be transferred in specie, eliminating
the need to sell the property. Ben has existing benefits totalling £120,000 from an executive pension plan that he can
transfer into the SSAS. A contribution of £40,000 can be made for Judy, together with her personal pension plan
transfer of £55,000.
The existing borrowing of the two SIPPs will be repaid upon the initial set-up of the SSAS using £85,000 of the £90,000
held in the SIPP bank accounts, leaving Peter and Jane £5,000 to transfer along with the property. The timing of these
events is crucial to ensure that the correct sequence of payments is made.
Peter and Jane’s adviser explains flexi-access drawdown provides them with their retirement benefits solution. By
taking a pension commencement lump sum of £46,250 each, the remaining funds can be retained by the scheme.
Liquidity for the ongoing payment of pensions will be met by the rental income paid by the company for the leased
scheme property. Ben and Judy can start to accumulate a larger proportion of their earmarked share of the fund as
property, allowing the cash elements to be notionally allocated to Peter and Jane.
If additional cash funds are required in the future, to enable Peter and Jane to draw greater benefits or the SSAS to
make a loanback to the business for example, it will be possible for the SSAS to borrow up to 50% of the net scheme
assets at the time of the loan, on a commercial basis and use the property as security.
In the event of the death of one of the SSAS members, funds can be passed on to the other scheme members. This way
pension wealth can be retained in the scheme for multiple generations of nominated beneficiaries until capital lump sums
or income are required; particularly useful for a family owned business. Any funds passed on in this way, by a member
who dies before age 75, will be paid tax-free to nominated beneficiaries, or their successors, when they are taken. This
offers succession planning and keeps funds within a tax efficient environment to provide ongoing financial security.
This scenario illustrates some of the key features of a Rowanmoor SSAS. It is based upon our understanding of current
pensions law and taxation and is correct at the time of publishing. Professional advice from a suitably qualified adviser
should always be sought when considering retirement planning.
For more information on Rowanmoor’s products and services please visit our website www.rowanmoor.co.uk, call
03445 440 550, or email [email protected].
03445 440 440
03445 440 500
@
[email protected]
rowanmoor.co.uk
Rowanmoor Executive Pensions Limited (No. 5792242), Rowanmoor Personal Pensions Limited (No. 2268900) and Rowanmoor Trustees Limited (No. 1846413) are companies registered in
England at Rowanmoor House, 46-50 Castle Street, Salisbury SP1 3TS. Rowanmoor is a trading name of the Embark Group.
Rowanmoor Personal Pensions Limited is authorised and regulated by the Financial Conduct Authority.
If you require this document in audio, large print or Braille format, please telephone 03445 440 550 or fax 03445 440 500.
SSAS CS PJ 04/17