SSAS arrangements have not needed to have a professional trustee since the pensions tax reforms of April 2006. Not all of them have guidance from accountants or financial advisers either. Very roughly, we think there could be anywhere between 3,000 and 7,000 SSAS in that situation, out of around 30,000 SSAS in total.
In some cases, SSAS have not been thoroughly checked for over 15 years, and that can bring with it a variety of issues. It can be a bit like my Triumph Roadster. It looks OK from 20 yards or so, but get closer, or if you’re really brave open the bonnet, and you realise that a lot needs doing to make it work as it should.
Fortunately for all concerned, this article isn’t about servicing the brake master cylinder (don’t ask) but it is worth raising the point that like most things there are some good things to look at that might help trustees and advisers.
It is far better to address any potential issues before they become an emergency. Where you do find something that needs attention, in most cases SSAS clients can he helped with tricky problems in order to set their pension scheme on the right footing and preserve the tax privileged funds for future generations. This article gives an idea of the areas you might want to look over.
How old is the trust deed?
The older the governing documents are, the more likely that they have not kept up with changes in the legislation. It is better to have a deed which accommodates the up to date rules. This is true even though some of the current options are available without updating the deed. The point is that if there were a conflict between the deed wording and some action the trustees are taking, that could breed time-consuming disputes, even if the Trustees might well be doing the right thing.
What is everyone’s share of the fund?
If the trustees have not been keeping track of each member’s share of the fund, they may not know whether a member has Lifetime Allowance issues, or if retired how much of their share of the fund is left. There is penal taxation when funds move from one member’s share to another, so keeping regular track of the apportionment can head off either unexpectedly breaching the Lifetime Allowance at one extreme, and a member’s fund running out without their knowledge at the other. If the assets have not been properly valued and the fund apportionment not updated regularly, that is a good sign that the scheme could benefit from some attention.
Is the property documentation up to date?
If the scheme owns property, then it is important to make sure the leases are up to date and rent reviews are being done, especially if the occupant is connected to the pension scheme in any way, such as your company or a related enterprise.
If there is a tenant with a held over lease, or a rent review has not been carried out, these can be danger signs. The documentation may not take account of the latest legislation and legal practice, and the scheme might not be as well protected as it might be.
Another point to ponder is whether independent professional valuations have been taken to back up leases between the pension scheme and connected parties. If they have not been done, there can be unintended tax exposure.
How up to date are your returns to HMRC?
Almost all SSAS have had to submit a registered pension scheme return to HMRC every year except 2019-2020. If yours has not, or if you don’t know, there is a chance that this needs bringing up to date.
Also, if there are members who have retired with sizable benefits, or who did so with a form of protection against the Lifetime Allowance, then another sort of report called the Event Report may well have been needed.
A telltale sign to look at this might be if the trustees do not easily know who is the Scheme Administrator, the person or entity responsible for making the returns to HMRC.
Are all members trustees and capable of acting?
If a scheme does not have all its members acting as trustees, or if a member trustee is not capable of fulfilling the role, there can be significant additional action and documentation needed to comply with legislation, and action may be needed in connection with the assets held by the scheme if they are related to an Employer. Examples of investments causing concern would be loans to employers, shares in companies which participate in the pension scheme, or property let to employers.
This is an area where there is increasing concern as the population ages.
Are members receiving mandatory information?
Scheme Administrators are obliged to provide some information to members in various circumstances. These include statements where contributions exceed certain levels, and/or reminders of members’ Lifetime Allowance usage. A review can clear up whether any remedial work might be needed.
For more information about this topic, please contact your usual Barnett Waddingham consultant. Or you can get in touch with me below.
Please bear in mind that the SSAS team do not provide regulated financial advice. So while we can help with the review and any repair work, we cannot provide guidance on what might be the most suitable investments, or course of action regarding benefits, for individuals.
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