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Discover the key differences between SSAS and SIPP.
The information on this page should not be considered as financial advice. If you are unsure what’s right for you, please make sure you speak to a financial adviser.
Any references to tax-free or tax treatment are based on our understanding of current legislation and tax treatment at the time of writing, which may of course change in the future.
Your pension choices can have a significant impact on your retirement. Two options you might have heard of are a self-invested personal pension (SIPP) or a small, self-administered scheme (SSAS).
Both SIPP and SSAS offer a range of flexible options that can boost retirement income. But like all investments, values can go down as well as up, returns aren’t guaranteed and you may not get back what you’ve put in.
Speaking with a financial adviser will help you understand the differences between SSAS vs SIPP.
SSAS vs SIPP: What’s the difference?
In the eyes of HM Revenue and Customs and The Pensions Regulator, SSAS and SIPP are both registered pension schemes and regulated in a similar way. In other words, the basic rules around investing are the same for each product. However, SIPPs are also regulated by the FCA via the provider.
Yet even though the underlying pensions tax rules are similar, the legislation is applied in different ways. For most people, a SIPP will be more suitable, whereas a SSAS is more specialist and typically aimed at senior executives, directors, entrepreneurs and high net worth individuals.
Here are the key differences between SSAS vs SIPP when it comes to eligibility and governance.
What is a SIPP?
A SIPP, or Self-Invested Personal Pension, is simply a personal pension that offers members greater control over how their money is invested.
In most cases, anyone can open a SIPP as long as they meet the provider’s eligibility checks. This is usually based on a minimum fund value, as SIPPs typically cost more to run than standard personal pensions.
SIPP key features
SIPPs are a great way to boost your State Pension income when you retire. Unlike defined benefit workplace pensions, where salary and length of service largely determine your retirement income, a SIPP works by investing your money in a range of assets you have chosen to help grow your pension pot.
A SIPP gives you freedom to choose where your money is invested and the level of risk you’re willing to accept within the plan. Your investment options must be included on your provider’s permitted investment list.
Other key features of SIPP include:
- It is an individual, personal pension plan.
- Members can invest in a wide range of assets, including non-insured investments such as unit trusts and in some instances commercial property, as well as insured assets like trustee investment plans.
- Employers can also contribute to the pension, and in some cases, contributions can be made through payroll deductions on the member’s behalf.
What is a SSAS?
A SSAS, or Small Self-Administered Scheme, is an employer-sponsored occupational pension scheme that usually allows up to 11 people to join. It is typically set up by company directors, small, family-owned businesses or those who run a limited company or partnership and want greater control over how their pension is invested.
A SSAS offers high flexibility, allowing members to act as trustees, invest in commercial property and use their pension funds to invest in the business itself.
SSAS key features
A SSAS can provide one of the broadest ranges of investment options among pension schemes, including the ability to lend funds back to the sponsoring employer.
Every SSAS must also have a scheme administrator to handle HMRC registration and reporting. Many schemes also appoint a professional independent trustee to help manage and run the pension effectively.
The key features of a SSAS are:
- It is an occupational pension scheme.
- Members are typically employees or directors of the sponsoring company.
- While there is no formal limit on membership, SSAS schemes can usually have no more than 11 members.
- Each member has a notional share of the scheme’s assets, which may include investments such as property or insured funds held in a trustee investment plan.
*Please note: LV= does not offer SSAS as a pension option.
What are the main differences between SIPP and SSAS?
A SSAS offers greater investment flexibility than a SIPP, largely because legislation allows it to invest directly in the sponsoring employer. While a SIPP can receive contributions from any employer, it doesn’t have a sponsoring company itself, meaning it cannot invest in a business in the same way.
These key investment differences make SSASs particularly suited for directors or business owners looking to use their pension to support their company. Let’s take a closer look at how the investment options differ between a SSAS and a SIPP:
SIPP |
SSAS |
|
Any UK resident aged under 75 is eligible to open a SIPP. |
Typically established by directors of small businesses. |
|
Can only lend to unconnected parties, meaning not your own company. |
Jointly managed by its member-trustees, with all investment decisions requiring unanimous agreement. |
|
Managed by a provider or administrator, responsible for all HMRC reporting. |
Can make loans of up to 50% of the scheme’s net assets to the sponsoring employer. |
|
You manage your own SIPP account, but must follow the rules and options set by the provider or administrator. |
Offers flexibility to use the pension alongside your business. |
|
Requires less administrative involvement than a SSAS pension.
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You can use up to 5% of the pension fund to purchase shares and invest in your business, potentially allowing the SSAS to own up to 100% of the company. |
|
Can be a more cost-effective option. |
Upfront costs may be higher, depending on the number of members. However, SSAS fees can be treated as a deductible business expense, reducing Corporation Tax similarly to employer contributions. |
|
Keeps your pension separate from those of colleagues or family members. |
Assets are pooled, with members holding a share of the overall scheme’s assets. |
|
SIPPs and Group SIPPs can jointly purchase property, but it cannot be tied directly to your business. Members’ portfolios remain separate; only the property is held collectively. |
|
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Investment options are usually more limited, and ‘non-standard’ investments are often not permitted. |
|
SIPP vs SSAS and the role of trustees
With a SSAS, each member is also usually a scheme trustee and will need to appoint a scheme administrator.
A SIPP is much simpler because the members do not need to get involved in setting up or running the scheme.
SSAS trustees and scheme administrators typically have the following duties:
- Register the scheme with The Pensions Regulator and submit regular scheme returns (unless it’s a single-member scheme).
- Register the scheme with HMRC.
- Report important events about the scheme and scheme administrator to HMRC.
- Submit information returns to HMRC.
- Provide members and others with details on lump sum allowances, death benefit allowances, transfers and other benefits.
- Pay any applicable tax charges.
- Apply tax relief on contributions.
SSAS vs SIPP: Which is right for me?
Choosing between a SSAS or SIPP depends on your personal circumstances and those of your company. If you’re preparing for the future, visit our pensions section for guides on starting a pension, growing your pension pot and making the most of your retirement savings. You can also request a call back from our pension advisers to discuss your retirement plans in more detail.
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