Pensions for directors and business owners

One of the most effective ways to maximise your retirement savings is to look beyond the more traditional personal pension options and opt to take greater control of your pension.

Two of these options often used by directors and owners of businesses are as follows:

The first, a Self-Invested Personal Pension (SIPP), gives you the ability to invest in a wider range of investment options (within the rules of the SIPP provider).

Your pension can be used to invest in stocks and shares, invest in collective investments and, most commonly, invest in commercial property.

A business owner can purchase their business premises within their SIPP and then rent it back.

This option gives you greater control over your future, unlocks higher potential returns than standard savings accounts, and may benefit from tax reliefs offered by the HMRC.

The second option, a Small Self Administered Scheme (SSAS), provides all of the investment avenues and potential benefits of a SIPP but can also be used to invest in your own business.

With a SSAS, you and up to 10 others can also acquire your own company shares or provide a loan facility back to your company.

The benefits of the SSAS are two-fold: as well as establishing a potentially lucrative investment portfolio, you are also able to provide affordable financing for your business, which can help with day-to-day running costs or even help accelerate its growth.

Of course, as with all investments, the level of return is not guaranteed and given the complex nature of these two types of pension structures and rules that must be adhered to, they may not be suitable for everyone.