Who regulates SSAS pensions?

11/02/2020

Have you been wondering who regulates SSAS pensions? What protection exists for your SSAS fund? And who’s accountable for meeting your fund’s HMRC obligations? Let’s take a look.

SSAS pensions are self-regulated

One of the main attractions of a SSAS is the freedom it gives you, particularly around investments. In essence the scheme is run by self-appointed member trustees – normally all employees of the same company, or family members – who are responsible for admin duties and investment choices. In that regard a SSAS is very much self-regulated although HMRC sets the rules around pension legislation.

However all SSAS pensions are overseen by The Pensions Regulator. This government-funded body will seek regular Scheme Returns and can investigate and prosecute any SSAS trustees or investment funds whom they suspect of breaking the law or acting fraudulently. As for internal disputes between members of the SSAS scheme, you can call upon the Pensions Ombudsman.

SSAS funds incur legal obligations

Just because SSAS pensions are self-regulated, that doesn’t mean you don’t have certain legal obligations to meet. SSAS rules are complicated and the penalties for breaching them are severe. For example each SSAS must appoint a scheme administrator, whose duties include.

  • Registering with The Pensions Regulator and providing a regular scheme return
  • Registering the pension scheme with HMRC
  • Reporting events relating to the scheme to HMRC
  • Providing information to scheme members regarding lifetime allowance, benefits and transfers
  • Paying certain tax charges

Any member of your SSAS fund can be the scheme administrator, however there’s no obligation for the scheme administrator to be a member of your scheme. That presents the possibility of recruiting a ‘professional trustee’ to carry this out on your behalf and almost all SSAS schemes are structured in this manner.

Appointing a professional trustee can save a lot of time and hassle and whilst there is not yet any legal requirement to do so – though this could change soon. Prydis has experts who are highly knowledgeable on pensions, tax law and investments. Prydis is also able to give advice on professional trustee/scheme administrator appointment to ensure that your SSAS is in good hands.

Are your investments protected?

All investments carry risk. But when you are using your future financial welfare as collateral, the last thing you want is to be left out of pocket due to fraud or the collapse of a company. The first thing to note is that all FCA regulated investments are covered by the Financial Services Compensation Scheme (FSCS) in the event of fraud, default or collapse. It is important to note that the FSCS limits apply per scheme and not per member. So if, for example, a regulated fund in which you had invested £100,000 collapsed, then the Scheme could claim only £50,000 in respect of this. However investments that are not protected by the FCA are not covered by the FSCS – therefore your money is at risk. These investments include commercial property investments and loans.

Your cash reserves are protected too

Whether you have invested funds or not, your SSAS scheme is likely to have cash reserves held in an account linked to the trust. These are also covered by the FSCS. So in the event of a bank collapse, the Scheme can claim up to £85,000 for any funds that are lost (each member does not get a separate £85,000 ‘allowance).

Your investments and pension contributions are legally ringfenced

The trust structure of the scheme itself provides another layer of financial protection. Essentially your investments are legally ringfenced and will almost always be protected if any external scheme administrator that you are using were to collapse. (You would simply transfer your assets to another scheme administrator.) Furthermore because your investments and contributions are held separately from your company, they are protected from creditors if you are declared bankrupt.

We can cover a lot of ground in fifteen minutes…

Pension decisions are some of the most important that you will ever make. They can also be incredibly complicated. Call your nearest office for a free and no-obligation initial consultation. Or send us an email and let us know a good time to call you. We are pensions experts. And we can cover a lot of ground in a fifteen-minute call.

James Priday

This article was written by James Priday

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