Probably because we see a pension as locking money up for a long period of time when it may be needed to support our business activities.
Building a fund for the future is something we all know we should do. As an owner director we see our business as the route to do this. We’d like to set funds aside in a pension, but we are reluctant to do this just in case we need the funds to support our business activities. So each year we add to our retained profits – paying corporation tax on the profits we make.
In doing this we are missing out on the tax advantages of making pension contributions – which reduces the amount of corporation tax we pay – because of the fear of locking money up that we 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 we are prepared to sacrifice tax benefits to achieve this.
So just suppose there was a pension that did meet the needs of you and me, the owner director. It took advantage of the tax benefits of the company making pension contributions on our 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! Within accountants who work with these owner directors it’s not much better and IFA’s won’t talk about them. It’s no wonder it’s a best kept secret.
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.
‘Too good to be true’ I hear your say. The reality though is that it does exist; it’s fully approved by HMRC and it’s aimed specifically to meet the needs of owner directors of limited companies and you’re not taking advantage of it!
If you’ve read this far, I’ll put money on it that you have never heard of a SSAS, yet alone know what it can do for you and your business. Let’s have an informal chat over a coffee and explore how a SSAS might work for you. 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 you!