Self-Administered Pensions

Self-Administered pensions (also called Small Self-Administered Schemes or SSAS’) allow company owners and their key employees significant control over the direction of their investments within a pension structure, whilst maximising the tax efficiency of their performance.

Typically, this type of pension is more flexible than those “off-the-shelf” solutions offered by high street pension providers and can change to suit an individual’s circumstances. A typical SSAS is portable and if you change employment in the future, the SSAS can move with you. Contributions can be varied or suspended without penalty.

If you are a business owner, a SSAS may be the most appropriate vehicle for you and your key employees as the structure will be separate from any other pension scheme sponsored by your Company, promoting confidentiality and facilitating the remuneration of key employees or building up your own pension fund prior to retirement or selling your business.

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What is a Self-Administered Pension?

A self-administered pension, also known as a small self-administered scheme (SSAS) is a Revenue approved one-member pension scheme which is set up by a company, typically for a senior employee or director. The individual controls how the SSAS is invested.

What are the benefits of an SSAS?

Your SSAS is flexible and can change to suit your circumstances e.g. it can be transferred with you if you move employer. If you are a business owner, you can use your SSAS to extract retained earnings out of your Company in a tax efficient manner.

How much can I contribute to my SSAS?

Tax relief on personal contributions is restricted. The below table sets out the maximum contributions you can make and receive tax relief at your marginal rate. Please note that there is also a salary cap of €115,000, so if your salary is in excess of this figure, your maximum contribution will the age-related percentage of this maximum figure.

Your age % net relevant earnings
Under 30 15%
30-39 20%
40-49 25%
50-54 30%
55-59 35%
60 or over 40%

How much can my Company or Employer contribute?

The maximum contributions that can be paid to your scheme by you and/or your employer will depend on your personal circumstances, including your number of years’ service with the Company and salary. Revenue have maximum funding limits which can facilitate significant employer contributions to allow a Company to ensure that an employee’s pension is properly funded at retirement. Please always remember that you do not want to exceed the maximum allowable fund threshold, which is currently €2m.

What can I invest a SSAS Pension in?

  • Property (geared and ungeared)
  • Direct equities on a discretionary or execution only basis
  • Government and corporate bonds
  • Investment funds
  • Private equity
  • Cash

Can I transfer my existing pension into a SSAS Pension?

Yes, you can transfer your existing pension into the SSAS. This is a very straightforward process and MoneyCoach can look after this on your behalf. It is important to understand that, unlike other types of pension, a SSAS needs to obtain Revenue approval before you can make any contributions or transfer any existing pension funds into it. Depending on the time of year, this process can take several weeks.

When can I access my benefits?

You can normally start taking your benefits from age 60 (and up to age 70). In certain circumstances, you can take benefits earlier, such as if you retire from employment, or if you are a business owner, you divest yourself of your business, from age 50 onwards, or if you can no longer work because of a serious illness or disability.

What are my options at retirement?

At retirement, you are entitled to the take benefits in one of two ways:

A once-off lump sum of up to 150% of your final salary (based on your length of service) and the balance of the fund must be used to purchase an annuity, which is a pension for life (subject to income tax)

Or

A lump sum of up to 25% of the value of the fund with the balance used to either;

Buy an annuity (pension for life and subject to income tax)

Or

Invest in an Approved Retirement Fund (ARF) which is an ongoing investment. You must take an annual income from your ARF equal to 4% of the value of the fund and this income will be liable to income tax.

Please note that the first €200,000 of all lump sums you are entitled to at retirement is tax free and the balance up to €500,000 is taxed at 20%.