PPS warns of SSAS loan back pitfalls

PPS warns of SSAS loan back pitfalls

‘SSAS Loan Backs are becoming more popular in current economic climate but there are pitfalls’ say Premier Pension Services

19th February 2009 , London: With the recession finally confirmed and with small businesses struggling to obtain finance from established sources, many companies with small self administered schemes (SSAS) are looking to their pension scheme for the money. But does this make good sense?

When the rules on loans came into force nearly 2 years ago, Premier Pension Services did not believe that SSAS loan backs would be as popular as they were before the new rules. In reality Premier Pension Services has seen a continuing appetite from SSAS clients wanting to use their SSAS to assist in the financing of the company, whether it is for the purchase of new machinery or for larger capital developments.

Nigel Manley, Head of Self Invested Pensions, Premier Pensions Services, says, “Experience has also shown that a small handful of clients do not fully understand the new requirements and ensuring the appropriate repayments are made is still hard work.

“Although we will always consider requests by clients to use their SSAS funds, we as the professional trustee, have a duty to inform the clients of the pitfalls of having such a loan, not least the possibility of an unauthorised payments charge arising if the repayments of capital and interest are not made

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