The Pitfalls of Member Trustees Running Their Own SSAS.
We have now got a high profile pensions regime, which allows complete freedoms for the over 55s and a more generous tax regime for passing on pension funds to beneficiaries on death.
Small Self Administered Schemes (SSAS) are not regulated by the Financial Conduct Authority (FCA) and since the financial crisis in 2008 the industry has been suffering from scammers targeting savers suggesting that they can liberate their pensions before the age of 55. This has triggered early access charges by HMRC and there have been schemes around that potentially risk losing pension savings to unsafe investments.
As SSASs are unregulated by the FCA they were the prime target for this type of scamming activity, which can be avoided by appointing professional pension scheme trustees, such as PML Trustees.
HMRC guidelines on ‘fit and proper persons’ to run a SSAS
HMRC issued guidelines in September 2014 as to the need for a “fit and proper person” to be involved in the running of a SSAS. HMRC does not provide a definition of a “fit and proper person” but if the Small Self Administered Scheme’s Administrator does not have sufficient working knowledge of the Pensions and Pensions Tax Legislation (a detailed piece of legislation), HMRC can deem the Administrator not fit and proper and it can de-register the scheme with a 40% tax charge on the whole of the value of the fund and there could be an additional tax charge of up to 55% on unsuitable investments. A very severe penalty.
At PML we have always acted as Professional Trustee and Administrators to our SASSs
Prior to 2006 this ‘scamming’ was not such a problem as every SSAS had to have a Professional Trustee, known as a Pensioneer Trustee. Since then, it is reassuring to know that we at PML, have always acted as Professional Trustee and Administrator to our schemes and can demonstrate that we are fit and proper in the new regime to be involved in the running of a SSAS.
If you are considering setting up a Small Self-Administered Scheme , we urge you to contact us or call us on 0121 693 0690 to talk to us first and discuss appointing a Professional Trustee. We are here to help.