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Bespoke SSAS schemes
A bespoke SSAS is established by a specialist pensions consultant,
is designed and invested according to the needs of the directors
and the sponsoring company. These small administered schemes
usually have contributions of £30,000 per annum or more
and often one of the uses will be to purchase commercial property.
The consultants typically charge a annual fee based on the
minimum number of hours of work required per annum to maintain
a SSAS scheme, and is not related to the size of the pension
fund. Any exceptional advise required due to a member retiring
or a special contribution to be made requiring tax advice
would attract an addition fee as agreed between the trustees
and consultant.
A bespoke scheme is particularly cost effective for larger
schemes with a fixed annual charge, fees charged for additional
work when required and nil commission taken for any investments
made by the SSAS. In general SSAS pension funds of less than
£250,000 with no immediate need to purchase commercial
property and low contributions may find the insured SSAS a
more cost effective route.
Insured SSAS schemes
Insurance companies have produced a number of off-the-shelf
SSAS products. In general these products are more suitable
where the contributions to a SSAS pension fund are small,
between £10,000 and £30,000 per annum, and there
is no immediate intention to purchase commercial property.
As with a bespoke SSAS, insured schemes must comply with the
same rules and regulations as required by the IR SPSS. The
main schemes available are:
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Hybrid SSAS |
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The insurance companies established
a hybrid SSAS to split contributions between their internal
insured funds and self investments with a minimum investment
of usually £10,000 per annum. With modern hybrid
SSAS schemes today the regular contributions to the insured
funds should not attract excessive charges as was common
in older schemes.
As with all SSAS pension funds the investments are pooled
and not earmarked to any particular member. However, the
insurance company operating the hybrid SSAS should have
a system in place that determines the members interests
in the SSAS.
The insurance company will have a wide range of experts
that may include actuaries, pensioneer trustee, lawyers
and administrators that can help establish the SSAS and
thereafter provide this expertise on an hourly basis as
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Nominal SSAS |
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Here the maximum amount
of a SSAS pension fund is invested in insurance company
funds. Although the IR SPSS do not specify the amount
to be self invested in order for a SSAS to be approved,
the amount is approximately 10%. This means a SSAS must
have at least 10% invested in assets other than the insurance
company's funds and a nominal SSAS is designed for this
purpose. |
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Trustee investment plans |
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The trustee investment plan
allows the SSAS access to an insurance company's funds
on a low charge basis. These plans are usually structured
as a single premium EPP policy and are owned by the SSAS
pension fund as being one of possibly many investments.
The advantages are a wide range of funds to choose from,
low fund charges, access to investment expertise, easy
encashment of the policy and the funds are gross so the
trustees do not need to reclaim the tax credits. |
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Deferred SSAS |
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In this situation the insurance
company will operate the pension fund on an insured basis
with the intention of switching to a SSAS scheme in the
future. In this situation the switch would be subject
to the rules and regulations applied by the IR SPSS.
In cases where an EPP is later switched to a SSAS the
IR SPSS have require at least 25% of the pension fund
to be self invested and the switch may not be permitted
if it is within 5 years of the EPP member's retirement
date. |
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Self-managed EPP |
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Due to changing regulations,
the self-managed executive pension plan (EPP) now has
to comply with many of the SSAS regulations and are therefore
not as attractive. This type of EPP offers all the usual
insurance company funds as well as a self-managed fund
that can include commercial property, which would be in
the name of the insurance company not the trustees of
the SSAS pension fund.
In contrast to a SSAS, the assets of a self-managed EPP
are earmarked to each member. This may be useful if the
directors anticipate leaving in the future. There is also
no restriction to the number of members and although no
approval from the IR SPSS is required for specific investments
the insurance company may apply asset type restrictions.
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