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SSAS in the Spotlight

SSAS

Two announcements by the Government last November regarding pension schemes and scamming along with a gradual reduction in the number of tax loopholes that are often used by businesses and high earners, means that use of tax planning and retirement vehicles is growing in importance. The Small Self Administered Scheme is one of these vehicles. Because a SSAS offers a high degree of flexibility when it comes to retirement, investment and death benefit options, we believe there has never been a more important time to establish a SSAS for business owners and their families.


When Retirement is not Retirement

SSAS

A significant number of you may well have noticed that you have friends and family who have masterminded a lifestyle change once they have reached age 55. You may be one of them. Either way, significant changes in society and the make-up of the population, have seen an end to the days when people simply stopped working and retired at 60 or 65. These days people can ‘retire’ from age 55, and, thanks to pension freedom can do much more with theor pensions savings than just take out an annuity. However, many don’t actually retire or retire completely. Hence the title of this article.

Some Changes Affecting Retirement

There are a number of dilemmas facing the Government in the broad area of pensions and related areas. These include:

  • Dealing with a rapid rise in the number of those aged over 80,
  • A decrease in the number of workers under the age of 40,
  • Anti-age discrimination legislation,
  • Flexible working provisions,
  • An increase in State pension age, and
  • The complications of people living to older ages but not enjoying the best of health.

In addition, it is interesting to note that there are apparently nearly 10 million UK workers age 50 and over, which represents almost a third of the workforce. More than 1 million of these are age 65 and over.  This is a relatively recent phenomenon, in the sense that retirement is now seen as being a significant length of time as compared to the working life of an individual.

Over the past few years, Barclays Wealth Research has identified that increasing numbers of high net worth investors (over 60% of those surveyed) have no plans to retire – causing it to coin the term “never retirees”.  Further recent research finds that just 12% of workers age 65-74 say they work because they “need to earn money”. By contrast, more than one third say it is because they “enjoy the work” and a further one in five because it gives them “a sense of purpose”.

Pension Freedom Arrived in 2015

Against the background of these changes, there are no surprises then that a flexible pensions regime was created in 2015 allowing members of pension schemes over the age of 55 to flexibly access their pension arrangements.

We at PML are – in the main – in agreement with this innovation. However, there are some powerful caveats to address and although retirement funds are not strictly speaking being used by retired people, they are essentially just that, retirement funds.  There must be some degree of caution, particularly if the member does not have any obvious other wealth to live off in a usually greatly extended later life.

We frequently receive the counter argument from a member in that they will downsize when funds are required and move into a smaller property.  In theory, this is workable but in practice it may not be.

Consider this. You will not be the only one thinking of doing this.  The market is starting to be flooded with large family sized properties, which actually can’t be bought by young families because of the exponential increase in property prices over the last 20 years.  In short, you may well be stuck with an illiquid asset which you may well desperately wish to convert to cash.

Pension Planning is now about a broad mix of assets and products.

Our belief, therefore, is that the basis behind pension planning, now we have pension freedom, is to have a broad mix of assets and products which you can call upon in retirement.  These could range from residential property, pension funds and ISAs. However, with the healthy tax breaks, pension schemes currently enjoy, if at all possible and if affordable, a pension scheme should be the first port of call in saving for retirement.

For help and advice with pensions, or call us on 0121 693 0690.

 


Pensions Cold Calling Ban

Pensions Cold Calling

In the Chancellor’s recent Autumn Statement, one of the proposed bills was for a ban on pensions cold calling. Such cold calling has been increasing rapidly since the introduction of pension freedoms in 2015, so we welcome this proposal. However, will the proposed legislation go far enough?

Cold Calling and Pension Scams

We have commented on this is. Re-visiting the point, we are in no doubt that pension freedom has resulted in a significant growth in pension scammers cold calling people, especially vulnerable people, to try to get them to part with their pension savings (now available from age 55) and invest it in high return schemes which were, in fact, bogus.

A ban on such cold calling has to be good news, for the individuals who would have been targeted and for the financial services industry itself.

Does the Proposed bill go far enough?

Only time will tell, of course, as the bill is debated and makes its way through the parliamentary process. A few things spring to mind, however.

  • The ban, however it is enforced, will not cover unsolicited emails or calls from outside the UK, so the problem will not go away completely.
  • More detail is required on how the ban will be enforced and the penalties for those caught transgressing.
  • It is far from clear from the current wording of the bill as to what constitutes a cold call. For example, would a call to alert a pension scheme member about their approaching retirement date, their retirement options and other things they need to take into consideration be counted or not as a cold call? Of course it isn’t a cold call, but the wording isn’t very clear yet.

Above all, although the bill is most welcome, assuming it gets royal assent, it does not mean that the practice of cold call scamming will stop entirely. In which case the advice that we always give remains good:

  • Be vigilant at all times when you receive a call from somebody you don’t know who tries to sell you a financial product that sounds too good to be true. This is because it almost certainly is too good to be true. You should not engage with all unsolicited phone calls of this nature, no matter how plausible they might sound, and put the phone down.

In the meantime, for help and advice on pensions, or call us on 0121 693 0690.


Small Self Administered Schemes and In-Specie Contributions

Pensions Cold Calling

In-Specie tax relief has been blocked by HMRC for 26 SSAS and SIPP firms.

Small Self Administered Schemes and SIPPs are governed by tight rules set by HMRC. As specialist SSAS administrators it is our job to keep up to date with changes in legislation, or specific actions from HMRC that affect these schemes. This article looks at a recent issue regarding in-specie contributions, where HMRC has refused to give tax relief to 26 firms who provide SSAS and SIPPs.

What is an in-specie Contribution? Why has HMRC blocked tax relief on it? What does it mean for Small Self Administered Schemes?

In-specie simply means ‘in its actual form’. So when it comes to pension schemes, an in-specie contribution is when an asset such as property or shares from outside a pension scheme is transferred into a pension scheme in its actual form rather than selling it and using the cash proceeds to fund the contribution.

In-specie contributions are not an especially common practice. When they happen, however, the scheme administrator claims basic rate tax relief from HMRC, whilst any tax relief above the basic rate is claimed by the scheme member(s) from HMRC, as is the case for cash contributions.

It was this practice that HMRC had challenged, which led to many SIPP and SSAS firms stopping accepting in-specie contributions. This was because HMRC had refused to give tax relief on these contributions to 26 SIPP and SSAS firms for the 6 months up to 5th September 2016.

As we understand it, HMRC has not really explained its decision, but the implication is that firms have not been following HMRC’s guidelines and that this is what prompted them to act. Our position is that we will not accept any in-specie contributions into our SSAS’s where we are the Trustee and Administrator, considering what is going on with HMRC.

The outcome of this situation remains to be seen as it appears to be unresolved. However, we will be keeping a close eye on it, and will report back on the outcome. Suffice it to say that high level discussions, chaired by law firm Pinsent Masons, have been held to decide the best route forward for the industry.

or call us on 0121 693 0690 if you have any questions about in-specie contributions and Small Self Administered Schemes.

 

 


SSAS Health Check

SSAS

Are you Concerned That Your SSAS is not Being run Properly? Contact us for a SSAS Health Check.

We at have been dealing with SSAS’s for more years than we would like to remember, so we’ve seen pretty much all there is to see about the problems they can run into. This article looks at some of the problems that SSASs run into. We can offer an informal health check for your SSAS if your scheme is experiencing some or all of the problems listed below.

Why does a SSAS run into Difficulties?

SASSs are primarily for the small family business, and many do not have independent professional Trustees. Under these circumstances, where the Trustees and members of the scheme are also directors of the business, the scheme can run into trouble. This is because of the huge amount of time it can take to administer a SSAS properly – time that is not readily available. In addition, the scheme can sometimes be treated by the Trustees as a bank account prop-up for the business if there is no independent Trustee involved.

We can help if your SSAS has administrative Problems

If you are running into administrative problems with your SSAS or just feel that it is not being run properly or there is a dispute between members, we can independently report on the SSAS for a small fee.

Here are a few of the common problems we encounter in Small Self-Administered Schemes if they are not run correctly.

  • No annual reports or event reporting to HMRC.
  • Unauthorised lending to the principal employer without security.
  • Members taking pension out of the fund using drawdown, but the fund has no payroll.
  • Investments in “Get Rich Quick schemes” which end up being worth nothing.
  • Non-payment of rent on properties owned by the pension fund.
  • Clear accounting and accounts being produced every year, setting down a split of the fund between members.

We have the experience and ability to turn a scheme round with our own blend of prescription medicine.

We would of course like to take on such schemes and put them in order using our Trustee, Administration and Financial Services expertise.

We are happy to have an initial informal discussion with you. If you are unhappy with your SSAS for any reason, please or call us on 0121 693 0690.


  • SSAS and Legal Entity IdentifiersWhat are Legal Entity Identifiers and Does Your SSAS Need One? From 3rd January 2018 it will be a requirement for legal entities and structures to obtain a reference called a Legal Entity Identifier (LEI) from the London Stock Exchange in order for the trustees of a SSAS to carry on investing. This» Read More
  • Mr M.P.On retirement, I had a mixture of personal pensions, the remains of a final salary pension scheme and a pension fund pot from a Group Money Purchase Scheme. I was uncertain as to what I needed to do and how to go about doing it, which led me to turn PML for honest advice and guidance. PML sorted out my complex pension arrangements.