Both you and I know the tax benefits any business owner can take advantage of by making pension contributions. I know that you do make these benefits clear to your clients and encourage them to pay into pensions, yet this message is being ignored by the vast majority of business owners.
Recent research by Aviva shows that less than a third of business owners have a pension that they contribute to. Business owners have a negative view of pensions – they see pensions as locking money up for a long period of time when it may be needed to support their business activities.
Building a fund for the future is something they know they should do. The route they see to achieve this though is their business and not a pension. They want to set funds aside in a pension but are reluctant to do this just in case they need the funds to support their business activities. So each year they add to their retained profits – paying corporation tax on the profits they make.
In doing this they are missing out on the tax benefits you point out to them by making pension contributions because of the fear of locking money up that they might need at some point.
‘Why pay company profits into a pension which locks up money for a long period of time when it may be needed in the business?’ is the question I often get asked, usually followed by ‘We need to keep our money accessible, just in case.’
This attitude is fully understandable. We all recognise the need to save for the future, but from the owner director viewpoint this must be balanced against the possible needs of the business as well. And they are prepared to sacrifice tax benefits to achieve this.
So just suppose there was a pension that did meet the needs of the owner director. It took advantage of the tax benefits of the company making pension contributions on their behalf; it provided retirement benefits; and it DID NOT lock the funds away when they were needed to support the needs of the business.
Well strangely enough, such a pension has been available to owner directors since 1973! It’s arguably the best kept secret FROM business owners. In my conversations with owner directors over 90% of them are unaware that such a pension exists!
So what is this pension? It’s a Small Self-Administered Scheme – SSAS for short. Amongst other options, it has the ability to lend funds back to the sponsoring employer, purchase commercial property (the rent you pay goes into your pension) AND build a valuable fund for your future needs and create a legacy for future generations.
A SSAS pension is an occupational pension scheme fully approved by HMRC and it’s aimed specifically to meet the needs of owner directors of limited companies and they are not taking advantage of it!
I need your help to make business owners aware of SSAS pensions. Because it’s an occupational pension it’s regulated by The Pension Regulator and NOT the Financial Conduct Authority. It’s therefore not going to be mentioned as an option by IFAs. It doesn’t fall within their regulated remit.
So can I ask you please to make a point of mentioning a SSAS pension as an option when you talk to your clients and encourage them to consider it as an option. There are many SSAS providers out there – it just needs a little research to find one in your area.
If you have the time and you’d like to find out more about a SSAS in order to help your clients, it would be great to have an informal online chat over a coffee. Email firstname.lastname@example.org or call me on 07834 600024 so we can get a date in the diary for an online meet up.
Let’s make a SSAS pension work for your clients!