How A SSAS Can Really Benefit Your Family Business
The Members Of A Family Pooled Their Pensions In A SSAS To Benefit Their Business And Provide Significant Flexibility
When family members pool their pensions into a SSAS, the combined value of the funds could be used for business purposes.
What’s more, the pension fund is protected in the event of death of a family member.
Mum and Dad set up a printing business some years ago. Their daughters, Carrie and Beth, are involved in the business. They want to expand by acquiring another premises.
They’d rather not rent a building because they want the long-term security of knowing the property can’t be taken away should a landlord decide not to continue the rental agreement.
Mum and Dad had a variety of pensions, some left with former employers and some personal pension pots. Carrie had a stakeholder pension.
The family decided to set up a SSAS. It was funded by combining everyone’s pension schemes.
As the scheme members all had different amounts transferred in, the Scheme Administrator recorded each person’s share of the SSAS fund.
When further contributions are made, these will be allocated to the relevant member.
By pooling the pension funds within the SSAS, there was more than enough money to buy a new factory to enable the business to grow.
The business will rent the factory from the SSAS. As the owners of the business are also trustees of the SSAS, they’ll effectively be renting it from themselves, giving them the control they want.
The SSAS can support the growth of the business in other ways.
Should it need to borrow in the future, the SSAS could lend the business up to 50 per cent of the value of the fund.
The rates for a loanback are competitive and the interest is paid into the SSAS to build the fund for the benefit of the members.
The loanback will need to be secured on an unencumbered asset, but this isn’t an issue as they already own two buildings.
When a members dies, the SSAS continues. It’s not necessary to sell any of the assets because the beneficiaries can choose to take the benefit as flexi-access drawdown, leaving the assets in the SSAS.
If no income is needed, the assets can continue to grow until income is required, or until money is passed onto another beneficiary.
A SSAS provides the business and the family with an incredible degree of flexibility. These options weren’t available with the family’s former pensions.
And they wouldn't be available with a collection of SIPPs.
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