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New requirements for SSASs
Richard Millson looks at the latest PSO Update involving Small Self-Administered Schemes (SSASs) .
The Pension Schemes Office have announced new requirements for SSASs in an Update dated 29 August 2000. The principal thrust of the new requirements is that the Pensioneer Trustee (PT) must be co-signatory to all Scheme bank accounts and co-owner of all Scheme assets within 6 and 12 months respectively of the date of the Update.
These changes are not unexpected and were first proposed in the Budget of 17 March 1998. Negotiations between various interested parties have continued since then with a view to making the requirements workable in a practical environment. The changes are intended to strengthen controls over SSASs and ensure they are run in a manner consistent with their tax approved status.
The detail of the Update follows, and the full text of the Update can be found here.
Co-ownership of Scheme Assets
Land/Property
The PT should appear on the Document of Title for any land/property owned by the trustees of the SSAS, whether for land inside or outside of the UK.
Where there is a restriction on the number of names which may be shown on the title, thePT must be one of those included.
As an alternative, but not for property in Scotland, the PT may register a legally binding "restriction" to prevent the assets being disposed of without the written authority of the PT.
Where there is a disposal of property all proceeds must be paid to a Scheme bank account of which the PT is a co-signatory.
Loans
The PT must be a party to all loan agreements made on or after 1 October 2000 but excluding rollovers of existing pre 1 October 2000 loans.
All repayments of loan interest and capital must be paid into a Scheme bank account on which the PT is a co-signatory.
Shares/Unit Trusts
All existing assets of this type currently owned by Schemes must be re-registered to show the PT as co-owner of the asset.
Portfolio of Shares/Investment Management Arrangements
The PT must be a co-signatory to any investment management arrangement. This arrangement should ensure that all proceeds from the portfolio will only be paid to a Scheme bank account of which the PT is a co-signatory.
The PT does not have to be co-signatory to any nominee account provided that it is not possible for this to be accessed by the member trustees.
Insurance Policies
All contracts written on or after 1 October 2000 must include the PT as a party to the contract. The wording in the contract must provide for the proceeds only to be paid with the written agreement of the PT.
Contracts written before 1 October 2000 are not subject to the requirements.
Borrowings
The PT must be a party to any new borrowings taken by the trustees after 1 October 2000.
The co-ownership requirements must be in place within 12 months from 29 August 2000.
Co-signatory Arrangements
The PT must be a mandatory co-signatory of all Scheme bank accounts, this requirement to be in place within 6 months from 29 August 2000.
All contributions or transfers of money into the Scheme must be paid into a Scheme bank account to which the PT is a co-signatory.
It is acceptable for regular payments out of the Scheme bank account to be made by standing order or direct debit where this has been previously authorised by the PT. Examples would include payments of pension, rents, rates, insurance premiums, etc.
The PT must be co-signatory to all non-regular payments including payment of lump sum benefits from the Scheme.
Timing
All Schemes which are already approved or which have been submitted for approval before the date of the Update must include the co-signatory requirements and co-ownership requirements within 6 and 12 months respectively from 29 August 2000.
Schemes yet to be submitted for approval must have the PT as co-signatory on Scheme bank accounts and co-owner of Scheme assets in order to gain approval to the Scheme.
Failure to meet the new requirements will lead to the approval of the Scheme being reviewed and possibly withdrawn.
Richard Millson, September 2000.