SIPP vs SSAS – What are the differences?

A self-invested personal pension (SIPP) is a type of personal pension which comes with tax efficiencies that can help you to grow your retirement savings. 

When you put money into a SIPP, the government adds to it as a way of giving you back some of the UK Income Tax you've paid. For every £80 you contribute from your relevant UK earnings, the government adds another £20, effectively giving you back the 20% income tax you paid on that income.

This is what’s often referred to as tax relief. If you’re a higher or additional rate taxpayer, you can claim even more back through your tax return. This tax relief system is designed to encourage you to save for retirement by making it more tax-efficient.  Some restrictions do apply for tax relief - you can find out more here.

SIPPs offer a flexible and tax-efficient way to save for retirement, allowing you to invest in a wide range of assets.

Find out more about what a SIPP is.

What are the benefits of a SIPP?

SIPPs come with a host of benefits, including:

• A wide range of investment choices, including stocks and shares, bonds, funds, and sometimes even commercial property, which either you can manage yourself or with the help of a financial adviser. 
• Basic rate tax relief. For personal contributions you make up to the amount you earn, SIPPs can benefit from basic rate tax relief at 20%, higher and additional rate tax payers can claim extra tax relief by way of self-assessment. If you have no UK earnings, you can make personal contributions up to £3,600 a year including tax relief. Bear in mind that from 6 April 2027 any unused pension funds will be included in an individual's estate for inheritance tax purposes.
• Estate planning advantages. If you die before age 75, your beneficiaries can usually receive the remaining value of your SIPP free from income tax subject to your remaining Lump Sum and Death Benefit Allowance. If you die at age 75 or over, the beneficiaries of your SIPP may need to pay income tax on any withdrawals they make from it. From 6 April 2027, most unused pension funds and pension death benefits are due to be included in the value of an individual's estate for inheritance tax purposes. This could affect the amount you can pass on. Inheritance tax treatment depends on your personal circumstances and tax rules may change in the future.
• Monitoring and control: SIPPs usually have online platforms that enable you to monitor and control your investments in real time.
• Who makes contributions. Each provider will have their own rules on who can pay into your SIPP. In most cases, they can accept payments from third parties or employers, but they're not suitable for meeting an employer's automatic enrolment requirements.
• Tax-efficient retirement planning. The pension grows free from UK Income Tax and Capital Gains Tax. 

A SSAS is a company pension scheme for no more than 11 members, usually including senior management or directors. Its members are also trustees in the pension, so they have direct control over investment decisions.

Please note, Aviva does not offer a SSAS pension product to customers at present. 

What are the benefits of SSAS?

SSAS members can also enjoy benefits that are similar to that of a SIPP, as well as some wider benefits including:

• Control and flexibility over investment decisions. Members, as trustees of the scheme, have control over investment decisions and can invest in a variety of assets, such as company shares or even the business’s premises. They can also lease assets back to the business. 
• Loan-back opportunities. A SSAS can lend money back to the sponsoring employer, which can be a useful source of finance for the company. This must be done under strict HMRC rules to ensure it's for legitimate business purposes and on commercial terms.
• Pooling of resources. SSAS enables multiple members to pool their pension savings, which could increase investment opportunities and share the costs of managing the pension.
• Estate planning and inheritance tax benefits. You may be able to leave your SSAS to the people you choose, and it could be income tax-free for them under certain conditions. If you pass away before you're 75 and before 6 April 2027, the whole amount can usually be paid as a lump sum to your beneficiaries, free of inheritance tax and subject to your remaining Lump Sum and Death Benefit Allowance could be free of income tax. From age 75, your beneficiaries may need to pay income tax on withdrawals they make from your SSAS. In the case of a death occurring from 6 April 2027 onwards, unused pensions  and some lump sum death benefits will be included in an individual's estate for inheritance tax purposes.
• Employer contributions. Employers can make contributions to a SSAS. These are usually tax-deductible for the business, so it's a tax-efficient way to improve employee pensions.
• Tax-efficient retirement planning. The pension grows free from UK Income Tax and Capital Gains Tax.

While both SIPPs and SSASs are both great options for tax-efficient retirement savings, they’re designed for very different people with specific saving needs.

Ownership structure

A SSAS is run by its members, who are also trustees, while a SIPP is a singple person's pension held within and run by a personal pension scheme. 

Connection to the workplace

SSASs are closely linked to the workplace, while SIPPs are personal pensions set up independently of employment, although an employer may contribute to a SIPP for their employee.

Management and control

In a SSAS, members act as trustees and, together, have direct control over the pension. A SIPP, however, is managed by the individual holder.

Investment flexibility

SSASs can lend to their sponsor company and invest in a wide range of assets, including company premises. SIPPs also offer a broad range of investments, but they cannot lend to the holder’s business.

Whether a SIPP or SSAS is right for you depends on your circumstances, how involved you want to be in managing your pension, and whether your retirement planning includes using your pension funds to support your business. 

As Aviva doesn't offer a SSAS, you may want to get some financial advice, or get in touch with specialist providers to understand your options.

If you're planning for your future, you can visit the pensions section of our website to browse guides on starting a pension, building your pension pot and making the most of your retirement savings.