Self-Invested Personal Pension (SIPP) and Small Self-Administered Scheme (SSAS) are two types of self-invested pension schemes that give the owner the freedom to choose and manage their own investments. They are both a pension ‘wrapper’ that hold investments until the owner retires and starts to draw a retirement income. Both schemes are designed for people who want to manage their own fund by dealing with, and switching, their investments when they want to. But while a SIPP is a personal pension scheme that’s got a single member and is operated by a SIPP provider (who normally acts as the trustee), a SSAS is an occupational pension scheme that’s got multiple members some of whom may also be trustees.
There are a number of similarities and differences between the two schemes, but generally both SIPP and SSAS can receive transfers in from other pensions and the amount one can contribute to either scheme is the same. But while a SIPP is commonly set up as a Master Trust by providers, every SSAS has a sponsoring employer with members usually directors or key employees of the business. Each member has a share of the SSAS’s value based on their contributions (including transfers in from other schemes) to the scheme.
In terms of investments, the provider and the employer decide which investments are allowable in the SIPP and SSAS but generally speaking the schemes can both invest in a wide range of assets including peer-to-peer (P2P) lending, deposit accounts, directly held shares, unit trusts and property. From the pension owner’s point of view, the interest offered by P2P lending is usually higher than the interest that can be earned from cash deposits: according to Altfi, the UK 1-year net returns last year were 3.77% across both business and consumer lending, with some P2P platforms such as Blend Network offering returns between 8-15% p.a. This makes P2P lending attractive to investors willing to take on investment risk to potentially earn higher investment returns, though P2P lending is not covered by the FSCS, whereas cash deposits are.
There are a number of SIPP and SSAS providers willing to allow lending on those P2P lending platforms that satisfy the requirements of HMRC pension legislation such as Blend Network. Blend Network works closely with Morgan Lloyd to allow its pension users to invest in double-digit peer-to-peer property loan opportunities.
Also, most P2P investments have a fixed maturity (in the case of Blend Network it is an average of 18 months). Blend Network does offer a secondary market where lenders can try to sell their loan parts, yet not all P2P platforms offer such liquidity and lenders should note that, unlike Blend Network, it may not be possible to withdraw any cash before the end of the term. Whilst Blend Network offers a secondary market, it should also be noted that the sale of loan parts is dependent on there being a willing buyer at the seller’s desired price.
If you are interested in learning more about how you can invest your SIPP or SSAS with Blend Network, call us on 020 3409 3300 and speak to a member of our team. Lenders can register on http://www.blendnetwork.com, pick and choose from all available loans and start lending now from £1,000 to target double-digit returns of up to 12% p.a. #LendWithBlend
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