If you’re self-employed or running a small business, you might have heard of a SSAS pension. But what is it, and who regulates it? A SSAS (Small Self-Administered Scheme) pension is a type of pension scheme designed for small businesses with fewer than 11 members. Essentially, it allows you to set up your own pension scheme, where the members of the scheme are also the trustees.
So who regulates SSAS pensions? The answer is the same as for most other pension schemes: the Pensions Regulator. The Pensions Regulator is a statutory body that oversees and regulates work-based pensions in the UK, including SSAS pensions. Their role is to ensure that pension schemes operate in the best interests of their members and that employers meet their legal obligations when it comes to providing pensions for their staff.
One of the benefits of a SSAS pension is that it allows you to have more control over your investments and how your pension is managed. However, with that comes additional responsibility, as you must ensure that your pension scheme is being run legally and in the best interests of its members. That’s where the Pensions Regulator comes in, ensuring that SSAS pensions are being managed appropriately and providing guidance and support to those running the schemes.
SSAS Pension Scheme Overview
A Small Self-Administered Scheme or SSAS is a type of pension scheme for small business owners or a group of individuals with significant assets. This scheme is designed to provide greater flexibility and control over pension investments. The members of the scheme act as trustees, allowing them to direct the investments of the scheme.
Who Regulates SSAS Pensions?
- HM Revenue and Customs (HMRC) is responsible for the tax aspects of SSAS pensions. The HMRC sets the rules and guidelines that govern how SSAS pensions operate.
- The Pensions Regulator (TPR) oversees the governance of SSAS pension schemes. TPR ensures that the scheme follows the rules and guidelines set by HMRC.
- The Financial Conduct Authority (FCA) regulates the promotion and marketing of SSAS schemes, as well as the advice given to members of the scheme.
SSAS Pension Scheme Key Features
SSAS pensions offer a range of benefits, such as:
- Flexible investment options: Members can choose their investments and have the freedom to invest in a wide range of assets, including commercial property.
- Tax advantages: Contributions are tax-deductible, and the scheme’s investments grow tax-free. There are also tax benefits when members take benefits from the scheme.
- Loan facility: SSAS pension schemes can lend money to the sponsoring employer, allowing them to access funds quickly and without needing external finance.
- Control: As the members of the scheme act as trustees, they have greater control over the investments and the running of the scheme.
SSAS Pension Scheme Rules and Regulations
SSAS pensions must abide by specific rules and regulations set by HMRC and TPR. Some of these include:
| Rule | Description |
| Maximum number of members | There can be a maximum of 11 members in a SSAS pension scheme. |
| Investment restrictions | Investments cannot be made in specific assets, such as residential property, tangible moveable property, and certain unquoted shares. |
| Annual allowance | There is an annual allowance for contributions made to the scheme. This allowance is £40,000 for the tax year 2021/22. |
| Lifetime allowance | There is a lifetime allowance for benefits paid from the scheme. The allowance for the tax year 2021/22 is £1,073,100. |
SSAS pensions provide a flexible and controlled way for small business owners or groups of individuals to save for retirement. With benefits such as flexible investment options, tax advantages, and a loan facility, SSAS pensions can be an attractive option for those looking for greater control over their pension investments.
SSAS Pension Rules and Regulations
SSAS pensions are self-invested personal pensions that enable members to have greater control and flexibility over their retirement savings. However, to maintain the integrity of the pension system, SSAS are subject to specific rules and regulations enforced by the UK government and regulatory bodies.
Who Regulates SSAS Pensions?
- The Financial Conduct Authority (FCA): responsible for overseeing the conduct of financial firms to ensure they operate in the best interests of consumers. The FCA regulates SSAS providers to ensure they comply with strict rules and protect consumers’ interests.
- The Pensions Regulator: responsible for ensuring work-based pension schemes meet certain standards, including SSAS. It provides guidance and information to trustees and members, and enforces the rules governing pensions.
SSAS Pension Rules and Regulations
SSAS pension schemes are subject to a range of rules and regulations, which must be followed to avoid penalties and potential legal issues. Some of the most important rules include:
- SSAS must have at least 2 members, and no more than 11.
- SSAS must have at least one active member who is also a trustee.
- Trustees of SSAS must act in the best interests of all members.
- Investments made by SSAS must be solely for the purpose of benefiting the members’ retirement income.
- SSAS cannot give loans or other forms of financial assistance to members or their families.
| Rule | Consequence of Non-Compliance |
|---|---|
| Failure to have at least 2 members | SSAS could lose its tax-exempt status |
| Providing financial assistance to members or their families | Could result in tax charges on the SSAS and a penalty for the member |
| Investing in prohibited assets | Could result in significant tax consequences for the SSAS |
It is important that trustees of SSAS pensions understand and comply with the rules and regulations to ensure that the pension scheme remains tax-efficient and that members receive their retirement benefits.
Companies House and SSAS Pensions
Companies House is the official registrar of companies in the United Kingdom, responsible for maintaining accurate records of all registered companies and partnerships. When it comes to SSAS pensions, Companies House does not regulate them directly, as the responsibility falls under the jurisdiction of the Pensions Regulator. However, there are certain pieces of information that SSAS schemes need to submit to Companies House to ensure compliance with the law.
- Annual Accounts: SSAS schemes must submit annual accounts to Companies House. These accounts must comply with the SSAP 24 accounting standard and must contain a breakdown of the scheme’s assets and liabilities.
- Annual Return: In addition to submitting annual accounts, SSAS schemes must also submit an annual return to Companies House. This return must contain details of the scheme’s trustees, including their names and addresses.
- Changes to Trustees: If there are any changes to the trustees of an SSAS scheme, these changes must be reported to Companies House within 14 days.
While Companies House does not directly regulate SSAS pensions, it is an important institution to be aware of. Failure to comply with Companies House requirements can result in penalties, fines, and even criminal charges. Therefore, it is crucial that SSAS schemes ensure they are meeting all of the necessary reporting and accounting standards.
On the other hand, the regulatory body that oversees SSAS pensions is the Pensions Regulator. Its role is to ensure that pensions providers meet the necessary standards of conduct, compliance, and governance, protecting the interests of pension scheme members. The Pensions Regulator has the power to investigate and take enforcement action against SSAS schemes that breach the law or fail to meet the necessary standards.
| Responsibilities of the Pensions Regulator: | Enforcement Powers of the Pensions Regulator: |
|---|---|
| • Monitoring compliance with the law | • Issuing compliance notices |
| • Investigating breaches of the law | • Issuing improvement notices |
| • Administering the registration of pension schemes | • Issuing prohibition orders |
| • Providing guidance and education on pension schemes | • Issuing contribution notices |
| • Issuing financial support directions |
In conclusion, while Companies House plays a limited role in regulating SSAS pensions, it is still essential to comply with its reporting requirements. The primary regulatory body responsible for SSAS pensions is the Pensions Regulator, which monitors compliance and has enforcement powers to ensure that schemes meet the necessary standards.
The Financial Conduct Authority and SSAS Pensions
As the name suggests, the Financial Conduct Authority (FCA) is responsible for regulating financial services in the UK. The FCA aims to protect consumers by ensuring financial markets are honest and not open to abuse, so it is hardly a surprise that they have a role in regulating Small Self-Administered Scheme (SSAS) pensions.
- The FCA, as the regulator of SSAS pension schemes, ensures that this type of pension complies with UK tax and pensions law.
- The FCA approves individuals who are qualified to act as pension scheme administrators, responsible for running SSAS pensions.
- The FCA maintains a register of regulated pension scheme administrators, and anyone looking to establish an SSAS should consult this register when selecting an administrator.
The FCA acts as an important check on the power of SSAS pension scheme administrators, ensuring that they are qualified to perform their role and operate within legal boundaries. However, it is important to note that the FCA only regulates the administrators themselves and not the underlying investments within an SSAS pension scheme. Therefore, it is still essential that scheme members take an active role in monitoring and scrutinizing investment decisions made within their pension schemes.
Below is a table summarizing the FCA’s role in regulating SSAS pensions:
| FCA’s Role | Description |
|---|---|
| Regulates SSAS Pension Schemes | The FCA ensures that SSAS pensions comply with UK tax and pensions law. |
| Approves Pension Scheme Administrators | The FCA approves individuals who are qualified to act as pension scheme administrators. |
| Maintains Register of Regulated Pension Scheme Administrators | The FCA maintains a register of regulated pension scheme administrators, enabling SSAS members to verify their administrator’s credentials. |
The FCA plays an important role in regulating SSAS pension schemes, ensuring the administrators are qualified, and that the pension scheme complies with UK law. However, it is still the responsibility of scheme members to monitor and understand investment decisions made within their pension scheme, as the FCA does not regulate underlying investments.
The Pensions Regulator and SSAS Pensions
SSAS Pension schemes must adhere to legislation set by The Pensions Regulator. This regulatory body ensures that schemes are run properly and in accordance with the law. It is important for businesses and individuals to understand the role of this organization and how it affects their pension scheme.
- The Pensions Regulator is responsible for regulating occupational pension schemes, including SSAS Pension schemes.
- It works to protect the benefits of members in such schemes and to encourage high standards of governance and administration.
- The Pensions Regulator monitors schemes to ensure that they are meeting their legal requirements and takes action when necessary to protect the scheme members.
SSAS Pension schemes are also subject to The Pensions Regulator’s Code of Practice. The code provides practical guidance on how to meet the legal requirements for running a pension scheme, including governance, administration, and investment principles. All SSAS Pension schemes must have a copy of the code and make sure they follow it. Failure to adhere to the code can lead to fines or other penalties.
Additionally, The Pensions Regulator provides information and guidance to SSAS Pension scheme trustees, employers, and members. This includes help with setting up a scheme, managing pensions during difficult times, and understanding the legal requirements of running a scheme.
| The Pensions Regulator | SSAS Pensions |
|---|---|
| Regulate occupational pension schemes | Are a type of occupational pension scheme |
| Monitor schemes to ensure compliance with legal requirements | Must adhere to The Pensions Regulator’s Code of Practice |
| Provide guidance and support for trustees, employers, and members | Must be properly run and administered to protect member benefits |
Understanding the role of The Pensions Regulator is crucial when establishing and running an SSAS Pension scheme. Staying up to date with regulatory requirements and guidelines will help to ensure that the scheme is run according to the law and in the best interest of its members.
HM Revenue and Customs and SSAS Pensions
When it comes to self-invested personal pensions (SIPPs), the Financial Conduct Authority (FCA) typically regulates the plan. However, with small self-administered schemes (SSASs), HM Revenue and Customs (HMRC) takes the lead.
For SSASs, HMRC sets the rules around tax relief and benefits as well as enforcing them through audits and compliance checks. SSASs are designed for small business owners and directors, allowing them to pool their pensions and invest in their own companies. They also provide more flexibility than SIPPs, such as the ability to purchase commercial property for business use.
- HMRC requires certain criteria to be met in order for a SSAS to retain its tax-advantaged status. For example, contributions must be made for the benefit of all members in proportion to their entitlements.
- SSASs are also subject to annual allowance limits, which restrict the amount of tax relief that can be claimed each year.
- HMRC also sets the rules for borrowing against SSAS assets, which can be an attractive option for business owners looking for liquidity.
It is important for those considering a SSAS to work with a qualified financial advisor or SSAS administrator to ensure compliance with HMRC regulations. Failure to follow the rules can result in the loss of tax relief and other penalties.
| HMRC Regulations for SSAS Pensions | Description |
|---|---|
| Proportional contributions | Contributions must be made for the benefit of all members in proportion to their entitlements. |
| Annual allowance limits | SSASs are subject to annual allowance limits, which restrict the amount of tax relief that can be claimed each year. |
| Borrowing against assets | HMRC sets the rules for borrowing against SSAS assets, which can be an attractive option for business owners looking for liquidity. |
Overall, while HMRC may not be as well-known as the FCA in the world of pensions, their role in regulating SSASs is crucial to ensuring compliance with tax and benefit standards. For those utilizing a SSAS, it is important to work with experts who can guide them through the regulations and requirements set forth by HMRC.
SSAS Pension Investment Restrictions
Self-Invested Personal Pensions (SIPPs) and Small Self-Administered Schemes (SSASs) are commonly used pension schemes that offer more flexibility and control for investors. A key element to consider for those looking to benefit from these schemes is understanding the restrictions that investment options under SSAS pensions face.
- Prohibited types of investment – These include residential properties occupied by scheme members and their families, and assets with promises or guarantees to scheme members beyond the benefits under the scheme rules.
- Complex investments – Pension schemes are not allowed to hold investments that are beyond their normal scope and administration. These could include alternative investments such as unquoted shares, hedge funds, and derivatives.
- Loans – Pension schemes can lend up to 50% of the net asset value of the scheme to sponsoring employers, but the loan should be secured against assets of equal or higher value.
- Excessive borrowing – The scheme can lose its tax-advantaged status if its borrowing is excessive. It is essential to adhere to the relevant limits, and seek professional advice before entering into any borrowings.
- In-house assets – Pension schemes are prohibited from holding more than 5% of their net asset value in any single in-house asset.
- Connected party transactions – These transactions must be carried out at an arm’s length basis. Any investment in a connected party must be made primarily to provide benefits to the member.
- Non-standard investments – Certain asset types may require approval from HM Revenue and Customs (HMRC) before the scheme can invest in them. Typically, this includes securities traded on the Alternative Investment Market (AIM) and overseas investments.
Investment Restrictions in Detail
The most commonly used asset classes for SSAS pensions include cash, fixed interest securities (bonds), shares, commercial property, and collective investments. However, there are investment restrictions for each of these asset classes. It is crucial to understand these restrictions to avoid any penalties and loss of tax-advantaged status.
| Asset Class | Restrictions |
|---|---|
| Cash | Cash held in the pension scheme is limited to bank and building society deposits, National Savings and Investments products, and cash held on a stockbroking account, providing it is held by an authorized person. |
| Fixed Interest Securities | The pension scheme is free to invest in any fixed-income security that is listed on a recognized stock exchange. |
| Shares | The scheme can invest in listed and unlisted shares, providing they meet the conditions set by HMRC. The pension scheme can’t acquire more than 5% of the shares in a single company. Also, companies that have promised their employees guaranteed dividends or annual remuneration are prohibited to invest in. |
| Commercial Property | The pension scheme can purchase UK commercial property as an investment, provided it is for scheme purposes only. It can’t hold residential property or property abroad. Any rental income from the property is tax-exempt, but the property can’t be used by the scheme member for personal use. |
| Collective Investments | The pension scheme can invest in unit trusts, open-ended investment companies (OEICs), investment trusts, and exchange-traded funds (ETFs), providing they meet HMRC criteria. |
Overall, SSAS pension investment restrictions are in place to ensure that pension assets are invested prudently and in a way that does not threaten their ability to deliver retirement security. Understanding these restrictions and seeking professional guidance can help maximize the benefits and avoid any pitfalls.
Who Regulates SSAS Pensions FAQs
Q: Who regulates SSAS pensions in the UK?
A: SSAS pensions in the UK are regulated by HM Revenue & Customs (HMRC) and The Pensions Regulator (TPR).
Q: What is the role of HMRC in regulating SSAS pensions?
A: HMRC sets the tax rules and regulations for SSAS pensions and approves their registration.
Q: What is the role of TPR in regulating SSAS pensions?
A: TPR protects the security of SSAS pension scheme members by enforcing rules for their governance and administration.
Q: How does TPR regulate SSAS pension schemes?
A: TPR monitors SSAS pension scheme trustees’ compliance with the pension scheme legislation, and takes enforcement action where necessary.
Q: What is the relationship between HMRC and TPR in regulating SSAS pensions?
A: HMRC and TPR work together to ensure SSAS pensions are set up and managed correctly, and ensure they meet all the necessary rules and regulations.
Q: Why is it important to have SSAS pensions regulated?
A: SSAS pensions are regulated to protect the interests of scheme members and maintain stability in the UK pension system.
Q: What happens if an SSAS pension scheme fails to meet regulatory requirements?
A: If an SSAS pension scheme fails to meet regulatory requirements, it may be subject to penalties, fines or other enforcement action by the regulators.
Closing Thoughts
Thanks for reading this article on who regulates SSAS pensions. It’s important to understand the regulatory framework around SSAS pensions, and the roles of HMRC and TPR in overseeing their operation. By working together, these regulators help ensure that SSAS pensions are secure and stable, providing a valuable way to save for retirement for those who qualify. We hope this information has been helpful, and please visit again soon for more insights on financial planning and retirement.