SSAS Investment Powers: What Can Your Pension Scheme Actually Hold?

The Breadth of SSAS Investment Powers

A Small Self-Administered Scheme has some of the widest investment powers of any pension arrangement available in the UK. The trustees — as the holders of legal title to scheme assets — can invest in almost any asset class, subject to the prohibited investments list set out in HMRC's pension tax legislation and the scheme's own trust deed.

This flexibility is what makes the SSAS uniquely suited to sophisticated investors who want pension assets working harder than a standard managed fund. Understanding the full landscape of permitted investments — and knowing exactly where the prohibited boundary lies — is essential for every SSAS trustee.

Permitted SSAS Investments

Commercial Property

Commercial property is the most common alternative investment held in SSAS pensions, and with good reason. The SSAS can purchase:

• Offices, industrial units, and warehouses
• Retail premises (shops, supermarkets, retail parks)
• Pubs, restaurants, and leisure facilities
• Agricultural land
• Mixed-use developments (commercial element)
• Car parks
• Hotels (with important caveats — see prohibited investments)

Crucially, the SSAS can purchase the company's own trading premises and lease them back to the sponsoring employer at a commercial rent. This sale and leaseback arrangement simultaneously solves a business premises problem and builds pension wealth. For a full guide to the property purchase process, see our article on buying commercial property through an SSAS.

The SSAS can borrow up to 50% of its net asset value to fund a property purchase. Our SSAS mortgage calculator can help you model the numbers for your intended purchase.

UK Listed Equities

SSAS schemes can invest in shares listed on recognised stock exchanges — the London Stock Exchange, AIM, and international exchanges. Investment in individual shares or through collective investment vehicles (unit trusts, investment trusts, OEICs) is permitted.

Fixed Interest and Gilts

Government bonds (gilts), corporate bonds, and other fixed-interest securities are permitted SSAS investments. These are often held to provide scheme liquidity and income stability alongside property investments.

Collective Investment Schemes

Unit trusts, open-ended investment companies (OEICs), investment trusts, and exchange-traded funds (ETFs) are all permitted. These can provide diversification across asset classes within the pension wrapper.

Insurance Company Funds

With-profits funds and other insurance company managed funds are permitted, though they are rarely the most attractive option for SSAS schemes given the flexibility available elsewhere.

Bank and Building Society Deposits

Cash deposits — including fixed-term deposits and cash ISA equivalents within the pension context — are permitted. Having a cash allocation within the SSAS is advisable for liquidity purposes, particularly where the scheme holds illiquid property assets.

Loans to the Sponsoring Employer (Loanback)

This is the investment power that is unique to SSAS arrangements. The scheme can lend money to its sponsoring employer, subject to strict HMRC conditions:

• The loan must not exceed 50% of the scheme's net asset value at the time of the loan
• The loan must be secured by a first legal charge over an asset of at least equivalent value
• Interest must be charged at a commercial rate (HMRC's prescribed rate or above)
• The loan must be repaid within five years (with a maximum of five annual repayments)

Matt Lenzie notes: "Loanback is the most distinctive feature of the SSAS from a business finance perspective. Used correctly, it gives a business access to pension funds as short-term finance at commercial rates — often cheaper than external borrowing and without the third-party due diligence a bank would require."

Unlisted Shares

Investments in shares of unlisted companies are generally permitted, but investments in the sponsoring employer or connected companies are treated as "employer-related investments" and are strictly limited — see below.

Overseas Property and Investments

SSAS schemes can invest in overseas commercial property and overseas-listed investments, though there are additional complexities around overseas property ownership from within a UK pension trust.

Employer-Related Investments: The 5% Rule

While an SSAS can make a loanback to its sponsoring employer (within the 50% limit described above), all other employer-related investments are limited to 5% of scheme assets. This includes shares in the sponsoring employer, loans to connected companies (other than the authorised loanback), and assets that the scheme has agreed to sell to connected parties.

The loanback is carved out from this 5% rule — it has its own specific rules — but other connected party investments must stay within the 5% limit.

Prohibited Investments

Certain investments are expressly prohibited for SSAS (and SIPP) pensions. Making a prohibited investment constitutes an "unauthorised payment" and attracts severe tax penalties.

Residential Property

The single most important prohibited investment for SSAS schemes is residential property. This includes houses, flats, student accommodation, holiday lets, HMOs, and care homes (which are technically residential). The prohibition covers both direct ownership and indirect ownership through a company or fund where 90% or more of the property is residential.

There is a limited exception for property that was commercially let to unconnected parties before it became residential, but this is a narrow exception that does not apply to most circumstances.

Tangible Moveable Property

Investments in physical assets that can be moved — fine art, antiques, wine, classic cars, jewellery, watches, coins, and precious metals (with the exception of gold bullion in certain circumstances) — are prohibited. These are the "passion investments" that some advisers promote but which carry significant unauthorised payment risk within a pension wrapper.

Loans to Members

The SSAS cannot make loans to any of its members or to associates of members. This is different from the loanback, which is a loan to the sponsoring employer (a separate legal entity from the individual members).

Investments That Effectively Provide Personal Benefits

Any investment that provides a direct personal benefit to a member — such as a holiday home or a company car held within the pension — is prohibited. Even if the asset is nominally an investment, if a member uses it personally, it constitutes an unauthorised benefit.

The Consequences of Prohibited Investments

An unauthorised payment from an SSAS triggers:

• An unauthorised payment charge on the member at 40% of the payment
• A potential unauthorised payment surcharge of 15% if the payment exceeds 25% of fund assets
• A potential scheme sanction charge of 15-40% on the scheme itself
• HMRC notification requirements within 90 days

These charges can be devastating and can occur even where the trustee made the investment in good faith without understanding the prohibition. This is why the pensioneer trustee's compliance oversight is so important.

Investment Strategy for SSAS Schemes

Given the wide range of permitted investments, SSAS trustees should develop a clear investment policy that reflects the scheme's objectives, the members' risk profiles, and the scheme's liquidity needs. A typical SSAS investment policy might allocate:

• 60-70% to commercial property (the primary long-term investment)
• 15-20% to equities and collective investment schemes
• 10-15% to cash (for liquidity and benefit payments)
• 0-50% to loanback (where the sponsoring employer needs short-term finance)

To understand how a SSAS mortgage can extend your property buying power, explore our SSAS property finance options or contact our team to discuss your specific situation.

"The SSAS investment rules are genuinely generous — the permitted list is long and the prohibited list, while important, is navigable with proper advice. The danger zone is promoters who push investments that look attractive but fall foul of the prohibited list. Always check with your pensioneer trustee before committing to any unusual investment."

— Matt Lenzie, Former Banker & Corporate Finance Partner

Key Takeaways

• SSAS schemes can invest in commercial property, equities, fixed interest, collective funds, cash, and loanbacks to the sponsoring employer
• Loanback to the employer is unique to SSASs and is limited to 50% of scheme net assets
• All other employer-related investments are limited to 5% of scheme assets
• Residential property, tangible moveable property, and loans to members are absolutely prohibited
• Prohibited investments trigger severe tax charges — the unauthorised payment charge is 40% of the investment value
• Always obtain pensioneer trustee approval before investing in any non-standard or complex asset