RP Case Study: Using SSAS for commercial property

Three brothers who held a SSAS together were faced with a difficult decision when they were approached to sell some commercial property they owned through their pension

Building Brothers is a family building firm based in the Midlands. They set up a small self-administered scheme (SSAS) back in 1985 with the help of their family financial adviser Kevin.

The SSAS has 3 members all brothers and the original reason that they were advised to set up a SSAS, by Kevin, was to purchase a building yard that they needed for business purposes. As they are building suppliers and also undertake building contracts locally, they needed additional space so that their business could continue to expand.

They used the yard successfully for many years and the company paid commercial rent into the scheme.

This was originally set up pre-2006 (A-Day) and contributions were based on the actuary’s decision. This meant that when they did have a profitable business year, they made quite substantial contributions into the SSAS, the driver for this was to make sure that they had enough funds to retire and to keep the building in the SSAS as they wanted to pass the business and premises down to the next generation.

The business continued to flourish, despite difficult economic times through the financial crisis, and after about 10 years a large supermarket chain that wanted to purchase the site approached them. It was in a prime central location in a buzzing town and ideal for a supermarket.

The three brothers had originally purchased the land and the building on the site for £100,000 and had made a number of improvements over the years, but obviously the building was not of much use to the potential new owner. The brothers were torn as this was a once in a lifetime opportunity, but for them to sell the business premises and not be able to pass it onto the next generation was a difficult decision for them.

After quite a bit of negation and discussions with their financial adviser and family, they eventually agreed to sell the site for almost £1 million.

Due to the sale of the site, the SSAS was now very overfunded, so they decided to bring in their sons and daughters that were working in the business and the actuary reallocated the funds, as could be done in those days.

The older generation retired before 2006 and the new generation in the scheme applied for enhanced protection as they were well funded as well.

The original 3 brothers were very pleased and couldn’t get over how well their SSAS had worked for them and was continuing to do for their family. The business was moved to an out of town site and again the SSAS purchased the required building and yard that they needed.

Elaine Turtle is director at DP Pensions