Comparing SIPP and SSAS

Note this article was originally published in August 2022 and has been updated in May 2025:

As a firm which offers both SIPP and SSAS, we are often asked which is best. In this article we compare these products, which although very similar, have some significant differences.

Why do we have two similar but different products?

For many years, pensions legislation treated occupational and personal pension schemes very differently, particularly around the level of funding and benefits available. Whilst much of the legislation affecting pensions was consolidated in 2006, some key differences remain, and therefore both products still have an important place in the market.

What is a SIPP?

A SIPP is a Self-Invested Personal Pension and can be set up by anyone, including individuals who are employed, self-employed, not working or retired. They can even be set up for children.

These schemes have been available since 1990 and were introduced when the then Chancellor, Nigel Lawson, said in his 1989 Budget Speech “I propose to make it easier for people in personal pension schemes to manage their own investments”.

Their popularity and growth have been immense, with over 5 million plans currently in existence.

Although the legislation does allow a very wide range of investment options under a SIPP, the provider will have its own criteria. Some firms have found that offering the widest investment choice doesn’t always lead to good outcomes, so you should expect a firm to clearly set out the range of permitted investments.

What is a SSAS?

A SSAS, or Small-Self Administered Scheme, is a specific type of pension scheme, which requires a Sponsoring Employer to establish it for one or more its employees.

These schemes have been very useful to business owners since they first emerged, around 1973.

Even today, SSAS offers the broadest range of investments of all types of pension scheme, including the option to make a loan back to the Sponsoring Employer.

Each SSAS requires a Scheme Administrator, who will deal with HMRC registration and reporting requirements. Most SSAS will also engage a professional Independent Trustee, to assist with running the scheme.

Eligibility

SIPPs can be established by anyone. Note that we only set up these plans for UK residents.

SSAS can only be established by a Sponsoring Employer for at least one employee of the firm. Once a SSAS has been established, the Scheme Administrator will make an application to HMRC for the scheme to be given registered status. HMRC may confirm this or defer or decline a decision on registered status.

Maximum number of members

A SIPP is an individual plan which can purchase investments on an individual or group basis with other SIPP members. Joint investments in commercial property are very common. There is no limit to the number of joint owners in a group.

A SSAS is a single pension scheme which can have up to 11 members. The investments are shared by all participants, in proportion to their interest in the scheme.

Regulatory status

SIPPs are regulated financial products; firms which establish and operate them must be authorised by the Financial Conduct Authority.

SSAS scheme trustees and administrators are not regulated themselves, but their schemes are. SSAS schemes with 2 or more members are required to register with The Pensions Regulator.

With SSAS being subject to less regulation, they are often a target for scammers, who promote the ability to ‘make your own decisions’, often with dire consequences. Most of our SSAS customers benefit from the appointment of our trustee company as Independent Professional Trustee and Scheme Administrator.

Decision making

With a SIPP, each individual makes their own decisions. If a group of SIPPs jointly own commercial property, decisions are made jointly over that specific investment.

With a SSAS, all members must be trustees, and all decisions must be made on a unanimous basis. This can sometimes lead to problems especially where agreement cannot be reached. Care should be taken when deciding who is to be involved in the scheme.

Loan facility

SIPPs cannot make loans to a connected employer, otherwise this would be an unauthorised payment and would trigger severe tax penalties.

SSAS can make a loan to the Sponsoring Employer or a Participating Employer, provided it is secured by a first legal charge. The loan can be no more than 50% of the net asset value of the SSAS and is set up on repayment basis with interest charged at a commercial rate (cannot be less than 1% over base rate, rounded up to the nearest quarter percent), for up to a maximum of 5 years.

Unlisted company shares

SIPPs cannot usually invest in the shares of an unlisted company.

In theory, a SSAS may be able to buy unlisted shares, provided the amount invested is no more than 5% of the net asset value of the scheme. In practice, we see very little of this type of investment as they would often trigger unauthorised payment tax charges and in our view, unlisted shares are not likely to be suitable investments for pension scheme trustees. This due to the fact they tend to be highly illiquid, difficult or costly to value, and the level of monitoring required to identify potential tax penalties.

Speed

We can usually set up SIPPs within a few hours.

SSAS currently takes between 1 to 2 months to be established, due to HMRC processes.

We do sometimes find that someone needs to make pension contributions before a SSAS can be established, in which case we can set up temporary SIPPs to receive the contributions, which may be transferred to the SSAS later.

Cost

The fees will depend on what type of transactions are being undertaken. We would not advocate choosing between a SIPP or SSAS solely on cost, as they are very different and, in many cases, a SSAS will require additional steps in order to achieve the desired result. SSAS is certainly not a mass market product and care should be taken to ensure that the right option is selected. Note that we do not provide advice or guidance on which is best for a particular customer.

 

Note that the information in this article is based on InvestAcc’s understanding of current law and HMRC practice, which is subject to future change.

 

May 30th, 2025