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SSAS and Legal Entity Identifiers


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 article looks at what an LEI is, what determines whether a SSAS needs one, and what the costs are if it does.

Pension Scams and SSAS: The Government’s Consultation Response


28 Page Document Summarises the Outcome of the Government’s Consultation

On 21st August 2017, the Government in a combined paper from the Treasury and the Department for Work and Pensions, published it’s long overdue and much anticipated response to its Pension Scams Consultation. The was prompted by the significant increase in Pension Scamming that has coincided with the arrival of Pension Freedoms in 2015. In this article we look at the areas that are relevant to our core area of expertise – Small Self Administered Schemes (SSAS).

Banning Cold Calling in Relation to Pensions

These are the key sections for this area in the report:

2.3 The Government intends to proceed with the proposal to legislate for a ban on cold calling in relation to pensions.

2.8 The is developing new terms to describe ‘Advice’ and ‘Guidance’ to help consumers understand what financial advice can offer them.

2.25 The Government intends to extend the ban on cold calling to all electronic communications about pensions.

2.33 The Government does not intend to impose criminal sanctions and custodial sentences on those in breach of the ban on cold calling, the reason being that introducing a ban, without criminalising breaches, will allow the to take action immediately without having to consider the caller’s intent.

2.37 The ICO has no power to take action against firms located overseas, unless the calls are made on behalf of a UK company.

2.42 Next Steps. “The government intends to work on the final and complex details of the ban on cold calling in relation to pensions during the course of this year. This will ensure that we get draft legislation to ban cold calling in relation to pensions right. The government will bring forward legislation when Parliamentary time allows.”

Limiting the Statutory Right to Transfer

These are the key sections for this area in the report:

3.12 In deciding on whether a Member has a Statutory Right to a Transfer, the Government agrees that evidence of an employment link should be provided and that members should be primarily responsible for supplying it.

3.22 The Government does not consider that there is a need to pursue the alternative option of a statutory discharge letter and cooling off period.

3.23 Whilst the Government can see the attraction of Authorisation, it would require rigorous assurance and regular monitoring of Schemes. They see the further regulation of Master Trusts as a trial run of TPR Authorisation.

3.25 The Government is reluctant to introduce additional legislation compelling members to seek guidance, which members may see as another barrier to transferring their funds, but there is a pilot running by some larger providers.

Making it harder to open fraudulent schemes

These are the key sections for this area in the report:

4.4 The Government is proposing to make it a requirement to have an active and participating Sponsoring Employer attached to all new and existing Registered Pension Schemes.

4.9 The Government agrees that pension scheme members with relevant knowledge should be free to choose their own investments. The Government will not therefore pursue the option to require pensioner trustees at this stage.

What Does All This Mean?

The first thing to say is that this paper is the result of a lengthy consultation process. It gives information on the direction that Government wishes anti pension scamming to take, but it is not a white paper, so it remains to be seen how the legislation will progress for SSAS in particular and pensions in general.

Pension scamming is serious. With an estimated £43m lost to scams since 2014, with almost £5m lost between Jan and May in 2017, our advice is to be vigilant at all times when you are contacted about your pension by any company that is not known to you. As the consultation paper shows, nothing can be done about cold calls originating from overseas. So, if any company is offering you returns that sound too good to be true, then they probably are. or call us on 0121 693 0690 instead.

SSAS and the 2017 Budget


What Items in the Recent Budget Will Have an Impact on SSAS?

It’s just over a month since the budget of March 8th, 2017. This article looks at some of the changes announced in the budget that are likely to have an impact on SSAS – Small Self Administered Schemes – and why. It also looks at one area – pension scamming – that wasn’t part of the budget, but which is expected to be introduced soon.

  • The Tapered Annual Allowance

This was introduced in the Finance Act 2015, and was effective from April 2016 for high earners.

What was introduced in the 2017 Budget was a new reduced Annual Allowance for those taking drawdown out of a Money Purchase (DC) pension scheme using the new Flexible Pension legislation introduced in April 2015.  The allowance has gone down from £10,000 per tax year to £4,000 per tax year from 6 April 2017.

This amount is applicable in the first full tax year after one takes money from a pension pot.  It is called the Money Purchase Annual Allowance (MPAA) and cannot be topped up by the carry forward rules.  It is designed to stop members taking drawdown then immediately paying back in contributions and obtaining tax relief.  In our opinion this is discouraging savings.

  • Tax on Transfers to Qualifying Recognised Overseas Pension Schemes (QROPS)

After 9th March 2017, transfers to non-European Economic Area (EAA) based Qualifying Recognised Overseas Pension Schemes will be hit with a 25% tax charge for any transfer requested. The tax will not apply where the individual genuinely moves to the country where the QROPS is based or where the QROPS is an occupational pension scheme sponsored by the individual’s employer. In addition, any payments made from funds transferred to a QROPS on or after the 6 th April 2017 will be subject to UK tax rules for five tax years after the date of transfer.

It is likely that this measure will reduce the number of QROPS transfers. As a result, we anticipate that more funds will remain in UK pensions schemes, especially flexible ones such as Small Self Administered Schemes.

  • The Reduction in Corporation Tax to 19%

Corporation tax was cut to 19% on 6th April, with tax relief on company pension contributions falling to the same figure. Tax relief on personal contributions remains unchanged and still applies at the individual’s marginal rate of income tax.

This means that pension contributions are still a significant tax-saving measure for both companies and individuals.

With SSAS’, which are Occupational Pension Schemes, immediate tax relief is given when the employer contributes.  If an employee or Director personally contributes, the tax relief is claimed back in the following year’s self-assessment paperwork.  Therefore, it is more tax efficient if considering personal contributions to a SSAS to use the Salary Sacrifice legislation where one sacrifices part of one’s salary in lieu of employer contributions.

  • The Reduction in the tax-free Dividend Allowance

The current tax-free Dividend Allowance of £5,000 will be cut to £2,000 from April 2018. It is likely, therefore, that ownership of shares in tax exempt schemes such as pensions and ISAs will grow in popularity, especially for SSASs, which are designed for business owners.

As SSASs are designed for business owners, their popularity may increase.

  • The Phasing in of the Landlord Tax

The Landlord Tax restricts income tax relief for expenses on residential property, such as mortgage interest, to the basic rate. It is expected that this will lead to more limited companies being used to hold property portfolios. This is because Mortgage interest will be treated as an allowable expense for limited companies, which will reduce profits and therefore corporation tax, making it a tax efficient decision.

What are the implications of the Landlord Tax for SSASs? A SSAS can only buy commercial property, so if someone is looking to invest in the property market, instead of investing in residential property and being subject to the reduction in tax relief as a result of the Landlord Tax, particularly for 40% tax payers, why not invest in commercial property within a Small Self-Administered Scheme, whereby the rental income into the scheme is not taxed and on sale there is no Capital Gains tax?

  • Anti-Pension Scam Measures – No Announcement Yet

This issue is very current, and although the Government’s consultation period on how to combat pensions’ scams and frauds finished in February 2017, there was not enough time to introduce any new measures in the budget. That said, we look forward to the introduction of tough new measures to prevent pension fraud. The current system is slow and has led to long delays for new SSAS registrations, while the due diligence process to prevent transfers to scam and fraudulent arrangements has seen pension transfers taking several months.

We are also of the opinion that compulsory Independent Trustees (originally known as Pensioneer Trustees) should be reintroduced to the SSAS market.

Contact us for more on the Budget and SSAS

If you would like more detail on how the budget changes will affect SSASs, please or call us on 0121 693 0690.

2017. A Good Year for SSAS?


When it Comes to Pensions, will 2017 be the Year of the SSAS?

As specialists in Small Self Administered Pension Schemes (SSAS) for many years, we have been providing expert service and advice for the setting up and running of SSASs. For that reason, we are pleased to report that new SSASs were a growth area over the last 12 months. This article takes a look at some of the reasons why and predicts a good year in 2017.

In 2016 the regulator got tough on scammers

For quite some time, thanks to the low interest rate environment we have lived with since the 2008/09 recession and the associated volatility of the stock market, those with large pots of pension money have been at risk of being ‘scammed’ by unscrupulous pensions sales people, promising them superb returns in schemes that were often entirely fake. In 2016, there is no doubt that the pensions’ regulator started to get tough on the scammers, and that is good news.

It’s also true to say that the introduction of pension freedoms also played a part, as this meant that the scammers could go direct to the pension pot holder, rather than having to go via a pension fund.

Before the introduction of pension freedoms, SSASs were a favourite of the scammers because they were considered to be a “less regulated” product than other pension vehicles. However, when HMRC introduced the “fit and proper” rule for administrators from September 2014, establishing and registering a SSAS became harder to achieve, which in turn made life harder for the scammers.

What Further Action is the Government Taking?

The fight against the scammers continues, and HMRC is now asking for even more information and documents before it will register new SSASs. This is good news for the industry and covers the following areas:

  • SSAS administrators will now receive a “notice to provide information and produce documents”, which will be issued after they have made the registration application. This means it will take longer to register a scheme because of the greater scrutiny, which can only be good news in the fight against the scammers.
  • The Government is also toughening its stance significantly. One example of this is the consultation paper it issued in December 2016, which seeks views on the possible introduction of a ban on cold-calling and the benefits this might bring.

Along with many other commentators, we believe that a ban on cold calling would be a good thing. We wonder whether the same legislation should apply to emails and texting, however. Time will tell.

The fact HMRC and the FCA are working to improve the situation regarding scamming is positive. Even though it is now taking additional time to set up new SSASs, we have not seen any decline in their popularity as a pensions’ vehicle. Indeed, we expect 2017 to be the year of the SSAS.

or call us on 0121 693 0690 for help and advice on SSASs.

The Benefits of a SSAS


Small Self Administered Schemes. The Self Invested Pension of Choice?

A Small Self Administered Scheme allows savers to diversify their pension money across a wide range of assets, including commercial property, and benefits from generous tax allowances from HMRC. The SSAS market in the UK is worth tens of billions of £s, and following the introduction of pension freedoms in April 2015, the flexibility of a SSAS has seen them grow in popularity. This article looks at just some of the main benefits of a Small Self Administered Scheme.

Benefit 1. A SSAS is an excellent vehicle for funding business growth

A SSAS can be used to purchase shares in a business or grant a secured loan to a business worth up to 50% of the value of the SSAS fund. Neither of these can be done with a SIPP, meaning a Small Self Administered Scheme is an excellent vehicle for funding business growth.

Benefit 2. The Scheme Trustees Model gives control

Members of a SSAS are usually scheme trustees, which means that the members get more of a say in the running of a scheme than would be the case with a SIPP, which operates a sole trustee/operator model. With the latter, for example, SIPP holders who have invested in commercial property can be required to use a property management firm as stipulated by the SIPP operator, often paying higher management charges. This is not the case with SSASs.

Likewise, on the death of a SSAS member, the decision as to where any death benefits are distributed would be that of the scheme’s trustees. The situation in a SIPP is different, as the decision rests with the SIPP operator, who is usually the sole trustee, who is not obliged to take account of the wishes of the SIPP’s members.

Benefit 3. A SSAS gives significant cost savings

A SSAS can be a highly cost-effective solution, especially where there is a shared interest, such as directors who are in business together, or where families are looking to pass on assets to future generations,

The key point is that a SSAS only has one scheme charge, regardless of how many members there are in the scheme. With a SIPP, however, the charges are per SIPP ansd per director, meaning that the charges for a SIPP tend to be higher.

For instance, a purchase of a commercial property by a Small Self Administered Scheme counts as one transaction, with one set of legal fees. Conversely, if a group of directors use their own SIPPs to purchase a commercial property the legal fees will be duplicated, as each director’s share of the property is purchased by their own SIPP, separately.

In addition, because the trustees of a Small Self Administered Scheme can choose their own professional partners and negotiate fees themselves, costs can often be kept lower in this area than via a SIPP.

Benefit 4. Increased investment flexibility

The investments allowed within a self invested pension are determined by HMRC. A SSAS is free from the Financial Conduct Authority’s identification of investments as either a standard asset or a non-standard asset, which gives a SSAS good investment flexibility.

With a SIPP, on the other hand, many operators will not allow non-standard assets to be held, without charging high fees, meaning the investment flexibility of a SIPP is less than for a SSAS.

Contact us for more information on SSAS

These are just some of the benefits of a SSAS. We are specialists in setting up and administering SSASs for our clients. If you are interested in finding out more about what a Small Self Administered Scheme could do for your retirement planning, or call us on 0121 693 0690 for an initial chat.

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