Self Administered Pensions
Small self-administered pension schemes (SSAPs)
An SSAPS is a corporate pension scheme with less than 12 members. It can be used where family members work and own a business together or for groups of company directors.
The scheme is self-administered, which means that you decide yourself what the pension fund will be invested in.
Under Revenue rules, all SSAPSs must have a Revenue-approved “Pensioner Trustee”. This will be a person or a company who is independent of the business and who is a professional pension trustee. This person or company will have experience in dealing with and setting up pensions.
This person acts as your pension administrator, shows you how to get started and tells you what rules and regulations you need to follow. A list of pensioner trustees is available from Revenue on request.
The difference between this type of pension and any other pension is that instead of giving your money to a life insurance or investment company for them to invest, you keep the money and invest it yourself. There are some restrictions on how you can invest the money. A sample of some of those restrictions is below:
- If you are investing in a property investment, the person selling or letting the property cannot be connected to the SSAPS
- You can’t use the pension fund to purchase a holiday home. There are also strict rules regarding the purchase of overseas property
- You cannot purchase shares in a company that you own, or are a director of
- Personal items cannot be bought, for example, art, jewellery, vintage cars etc
- Investments in private companies which are not listed on the stock exchange can only be a maximum of 5% of the pension’s assets and a maximum of 10% of the private company’s share capital
Types of Self-Administered pensions available are:
- Self-Invested Personal Pension (SIPP
- Personal Retirement Bond (PRB)
- Approved (Minimum) Retirement Fund (ARF / AMRF)
- Personal Retirement Savings Account (PRSA)
- Small Self-Administered Pension Scheme (SSAPS)
Managing your own pension investments
Self-invested products offer the holder the opportunity to manage their own retirement choices without the investment restrictions many life companies apply to their policies.
Self-invested products are best suited to individuals that have a clear understanding of investment risk. They are a clear choice for both experienced and new investors who wish to retain control and choice over their pension investments.
Self-Invested products allow pension investor access to the following broad range of investments:
- Direct share dealing facilities through a nominee stockbroking account/online platform
- Direct property and syndicated investments
- Bank deposit accounts
- Structured Products such as tracker bonds
- Institutional funds including many leading external investment managers
- A variety of collective investment schemes including unit trust arrangements
Property Purchase:
Self-Invested Pensions facilitates the purchase of commercial, residential and/or mixed-use properties in the Republic of Ireland or the United Kingdom through the self-invested pension structures. As such assets enjoy generous tax reliefs from rental income and capital gains taxes, the Revenue Commissioners have certain rules that must be adhered to, this ensures continued compliance and approval of the pension contract (including tax-exempt status). Therefore all property purchases are governed by
The following summary of the current Revenue Rules:
• The vendor must be at arm’s length from the scheme and the employer, including its directors, associate companies and any family members.
• The purpose of the acquisition is not for disposal or letting to the employer, including its directors and associate companies or a connected party as defined under Section 10 of the Taxes Consolidation Act.
• All letting and disposals must also be on an arm’s length basis.
• The purchase of holiday homes for personal use is not permitted.
• Purchase of overseas property is only permitted where there are appropriate arrangements in place to enable the Pensioner Trustee to maintain control of the asset, to ensure that Revenue rules are compiled with. We only facilitate Irish and UK property only.
• Revenue Commissioners also deem any development requiring planning permission within a pension fund as an investment to which these tax exemptions do not apply to.
• A transaction involving the acquisition and development of the property with a view to its disposal will not constitute an investment to which the exemption in Section 772(2), Taxes Consolidation Act, 1997 will apply.
• Any proposal that involves the diversion of the sponsoring employer’s taxable activity into the scheme is not acceptable.
• Borrowing by pension funds is permitted but with a maximum loan term of 15 years which must be on a capital and interest repayment basis.
• Approved (Minimum) Retirement Funds and/or Vested PRSAs cannot borrow and assets cannot be offered as security.
The Revenue Commissioners require all providers of self-invested pension arrangements to have sufficient controls in place to ensure the arrangements are compliant with their requirements. These may change from time to time. The rules listed above
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