A Summary Overview
A Small Self-Administered Pension (SSAP) is a Revenue Approved scheme that is set up by a company for an employee or for a director.
The key benefit of an SSAP is that the individual has more direct control over his/her investment choices versus a traditional insurance company scheme or occupational group scheme.
Tax relieved employee contributions (subject to the usual age and salary restrictions set by the Revenue) and tax-free employer contributions (not subject to the same age & salary restrictions) can be made to your SSAP.
An SSAP represents a suitable medium to long-term investment vehicle for those who earn more from their employment than they require to cover their personal living expenses on an ongoing basis.
By making additional voluntary contributions to your SSAP now, you are in effect lowering the amount of your income now when you might not necessarily need it, and thus you are lowering the amount of your income subject to the highest rates of income tax, PRSI and USC over your lifetime.
The funds building up tax-free in your SSAP can then be used to make a range of investments – the tax returns/income on those investments roll up tax-free in your SSAP, while any capital appreciation will also be earned tax free as capital gains tax will not apply to any profits made on the sale of your investments.
As with any pension plan, you are restricted from personally accessing your funds (in a tax beneficial way at least) in your SSAP until age 50 at the earliest– and there are many revenue rules surrounding allowable investment types and the amounts of borrowings that can be raised within the SSAP.
Further, SSAPs must at all times have a Revenue approved independent professional trustee called a pensioner trustee, who must be a cosignatory on all financial transactions and investments made by the scheme. As such, we always recommend getting advice before setting up an SSAP.
In this document we outline at a high level the investment options available and the types of Revenue restrictions that apply to an SSAP, the capacity for borrowing in an SSAP and we give a high-level summary on the key benefits in establishing an SSAP.