Unlike conventional pension schemes where investment decisions are typically made by a fund manager, a self-administered pension empowers you to determine the allocation of your funds. This structure is often favoured by business owners and investors seeking greater flexibility in their retirement planning.
For individuals in Ireland, self-administered pension options are indeed available. However, it is important to acknowledge that increased control necessitates a corresponding increase in responsibility for investment decisions and regulatory compliance.
What Is A Self-Administered Pension?
A Self-Administered Pension is a pension that you control. Instead of a fund manager making all the investment decisions for you. You get to decide where your money goes whether it’s stocks, property, bonds, or other investments.
It’s popular among business owners, solopreneurs and directors. But anyone can use Self-Administered Pension Scheme to plan their retirement.
The big advantage of self-administered pension funds is more flexibility and potentially higher returns. The downside is the need to make smart investment choices to grow your pension. If you like managing your own finances and want more freedom with your retirement fund, this could be a great option!
What Sets Your SSAP Apart?
SSAP is the best pension plan for any employee.
Here is how it is actually better than other pension plans available on the market.
| Difference Area | SSAP (Self-Administered Pension) | Traditional Pension |
| Investment Control | Direct control: You decide exactly where your money is invested. | Limited control: Investment decisions are made by a fund manager. |
| Tax Benefits | Potentially greater flexibility: Tax-free growth and can often lead to lower taxable income depending on contributions and withdrawals | Tax advantages exist, but the structure may offer less flexibility in how these benefits are realised. |
| Flexibility | Highly customizable: Can be tailored to individual needs and investment strategies. | More rigid structures: Often with pre-defined options and rules. |
| For Business Owners | Advantageous: Can accept direct company contributions, potentially offering more tax-efficient growth for business assets within the pension. | May have stricter rules regarding company contributions and asset management. |
| Withdrawals | Greater control: Often allows more flexibility in the timing and method of withdrawals in retirement (subject to regulations). | Typically follows set rules and timelines for accessing funds in retirement. |
Tax Benefits and Implications
One of the biggest perks of a Self-Administered Pension (SSAP) is tax efficiency. Contributions made to your SSAP, whether from you or your company, are tax-deductible and reduce your taxable income.
Plus, any growth within the pension, whether from investments in property, stocks, or other assets, is not subject to capital gains tax.
Self Administered Pensions funds are particular active to younger business owners as they are not capped by the traditional age limits. Company contributions can be made in addition to your own personal investment and are tax deductible against corporation tax.
As of January the 1st 2025 these have since been capped at 100% of the earnings within a given year. Meaning if you draw 60,000 in earnings from the company, your company can match this in company contributions to your pension.
How Much Are Self Administered Pensions In Ireland?
So, how much does an SSAP actually cost in Ireland? Well, there are a few things to consider—
- Setup Fees
- Annual Charges
- And, Of Course, How You Take Your Money When You Retire.
You can take a tax-free lump sum of up to €200,000. Nice, right? But if you take more, the next €200,001 to €500,000 is taxed at 20%, and anything over €500,000 is hit with a 40% tax.
The rest of your pension can go into an Approved Retirement Fund (ARF), where you can withdraw income on your terms—monthly, annually, or as needed.
For the self-employed, A Small Self-Administered Pension Scheme (SSAPS) gives you total control over your investments. But keep in mind that setting one up costs between €2,500 and €5,000. And you’ll have annual fees of 0.25% to 1% of your fund value (usually €800 to €1,500 per year).
Example Calculation
Let’s say you have a total SSAP fund of €700,000:
- €200,000 (Tax-Free) → You get the full €200,000
- €300,000 (Next Portion) → You keep €240,000 after 20% tax
- €200,000 (Above €500,000) → You keep €120,000 after 40% tax
Total Cash Lump Sum You Can Take
- €200,000 (tax-free) + €240,000 (after 20% tax) + €120,000 (after 40% tax) = €560,000
What Happens to the Rest?
Any remaining pension funds stay in an Approved Retirement Fund (ARF), where you can withdraw a regular income. However, withdrawals from an ARF are subject to income tax, USC, and PRSI (if applicable).
So, if your SSAP is €700,000, you could take home €560,000 in lump sums and leave €140,000 in your ARF for future income.
Final Thoughts
Setting up an SSAP is ideal if you want full control over your pension investments and are comfortable managing them. However, seeking professional financial advice is best to ensure you’re making the most of tax benefits and investment opportunities.
