A SSAP is established under trust by a company’s directors. The director is the ‘member’ and ‘Trustee’ of the pension scheme. A SSAP provides a tax-efficient environment in which a company’s funds can be invested to provide retirement benefits for directors. As the fund grows it is ringfenced for the member and is free from creditors should the company go into liquidation.
A SSAP gives company directors the opportunity to maximise their pension funds prior to retirement by giving them control over their investments. Unlike other pension schemes the directors can control and choose their investments. The range of investment options are extensive and include: property, structured deposits, direct investment in stocks and shares etc. Since the introduction of the Finance Act 2004 the Trustees of single member SSAPs can also borrow money in order to invest for the benefit of the scheme. Please note there are certain rules with regard to borrowing within an SSAP.
An SSAP can be used to purchase a property;
In relation to the purchase of a property through an SSAP, please see below the sequence of events for a property purchase through an SSAP (assuming the SSAP is set up & there are liquid funds for the purchase):
- Once a property is chosen, the property details would have to be forwarded to the pensioner trustee for approval(e.g. a brochure or link to the property if it is on a website)
- Documentation such a Member Trustee Investment Instruction (depending on the Pensioneer Trustee) to be signed by member and forwarded to the Pensioneer Trustee
- Deposit for property to be paid out of the pension scheme to the auctioneer/solicitor
- Contracts to be sent to the member trustee for signing and then forwarded to the pensioner trustee to co-sign (please note the contracts should be in the name of the pension scheme)
- Solicitor to send an invoice requesting balance of funds to be paid by the pension scheme
- Rent must be paid into the trustee bank account directly once the property is rented out
Please note that where property investments are concerned the following rules apply:
- The vendor must be at arm’s length from the scheme and the employer, including its directors and associated companies
- The purpose of the acquisition is not for disposal or letting to the employer, including its directors and associated companies
- The disposal of the property is 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 Pensioneer Trustee to maintain control of the asset, to ensure that Revenue rules are complied with
- A transaction which involves the acquisition and development of 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
- All rental payments will be paid into the bank account of the Scheme on immediately on receipt
Please note that the provision of a SSAP does not require licensing, authorisation, or registration with the Central Bank and, as a result, it is not covered by the Central Bank’s requirements designed to protect consumers or by a statutory compensation scheme.