Case study 06.01.2009
Read our case study on income planning to find out how a company director, close to retirement and with little pension provision, can start funding for retirement.
Read More >>>Small Self-Administered Scheme
Self-investment
The member trustees may use their SSAS's funds to inject cash into their business. This can be done by making a secured loan to the employer, known as a loanback.
Loans can be used to buy, for example, fixed assets, land for development or to increase stock and have to be repaid by regular capital and interest instalments. Loans are restricted to a maximum of 50% of the net SSAS fund. Such loans must be secured against assets by way of a first charge and the security must be sufficient to cover the loan and interest on it. The maximum term permitted is five years, with the interest being at least 1% above the average base-lending rate of the six leading high street banks.
Loans may also be made to third parties but it is not possible to make loans to the member trustees or anyone connected to them. This means that a SSAS established by a self-employed business owner or partnership may not lend money back to their business. Loans to third parties are not restricted to 50% of the fund and need not be secured.
This information relates to the Rowanmoor Pensions SSAS.