It was a labour government in 1975 that introduced the concept of small self-administered pension schemes. Originally designed to pay ‘Defined benefit’ or ‘Final salary’ pensions they are now more commonly used to provide ‘money purchase’ pension benefits, where the fund built up over time determines the amount of pension.
They are very popular amongst SMEs because contributions can be made by the sponsoring employer and relieved against corporation tax. Unlike other regulated pensions these schemes are individually registered by us with the Pensions Regulator and HMRC. Each scheme has its own name chosen by the client.
The scheme is fully recognised once approved, for all the normal tax reliefs applicable to pensions.
The scheme administration costs can be met by the sponsoring employer so as not to erode the value of the pensions.
A SSAS can have several members, these can be directors of a company for example or family members. Each member has their own account within the scheme but they can combine together to invest, if they choose to. This is most often done when buying property or engaging in loan arrangements with the sponsoring employer.
The investment choices are much wider than other pensions.
How do I build up a pension fund?
Pension funds are built up from contributions which can be made tax efficiently within certain limits.
It is also possible to transfer in pension funds already built up in company schemes or personal pension schemes including SIPPs. When considering a transfer in members need to take independent financial advice from a suitably qualified adviser.
Each member within a Worcester Pensions SSAS has an individual account and will receive regular updates on the current value.
Once the money is invested it grows free of capital and income taxes. Investment returns can add significant value over time.
How are the Worcester Pensions SSAS assets held?
All assets are held by the Trust itself and are not pooled with other clients’ schemes. All assets are held in the names of member trustees and our professional trustee company. All scheme investments are subject to special tax treatment, see ‘How is a Worcester Pensions SSAS treated for tax?’
Every scheme has its own individual bank account, controlled by us as administrators, through which all transactions are passed. Our current accounts are usually interest bearing where significant sums are held. We can also use individual deposit accounts. We do not share in any part of the interest earned, which is all paid to the scheme itself.