What is a SSAS?
A Small Self Administered Scheme (SSAS) is a type of occupational pension scheme that may be established by an Employer for the owner(s) and/or selected directors and employees (there may also be provision for including family members or other beneficiaries). The individuals who have been selected to benefit are called the members. There can also be associated employers in some circumstances. Where it is appropriate to make different arrangements for different members an employer may set up more than one SSAS.
The essential character of any occupational pension scheme, including a SSAS, is that money is paid in to the scheme and invested so that pensions can be paid to the members in later years (and sometimes to dependants). Money may be paid in by the Employer and / or by the members (and may include payments in from other pension schemes including from a SIPP).
What makes a SSAS special is that eligibility is discretionary and there is considerable investment flexibility (although also limitations). A SSAS limitation is that membership of a SSAS is limited to no more than eleven members (including members who have retired and are drawing a pension) but, as mentioned above, it is possible for an Employer to establish more than one SSAS.
Setting up a SSAS
Congruent will help you, the Employer, understand whether a SSAS is an option for you and whether there are other options. An initial consultation, at your premises (or other convenient venue), is free and that may be all that is necessary for us to provide you with the necessary documents for you to study and to make a decision. Sometimes further detailed work is necessary and Congruent will suggest what needs to be done, and the fees payable if any, for you to consider. The number of SSAS in force across the country is increasing so it does seem that they meet a legitimate business need, although they will not be suitable for every employer.
If you decide to set up a SSAS with Congruent there are contractual arrangements that need to be in place prior to the execution of the Trust Deed and Rules.
General warning about a SSAS
It is important to recognise that because a SSAS offers investment flexibility (although with limitations), and also makes use of tax benefits, it must meet significant HMRC requirements at all times. The essence of these requirements is that money put into a SSAS is within the allowed monetary limits and is used only for the intended purpose and that the Employer and members cannot benefit in a way that is not allowed. There are significant statutory requirements and those must be observed at all times with potentially severe penalties for non-observance. A SSAS should never be established unless all this is fully appreciated – Congruent can assist you with this.
Our SSAS service
Congruent provides three complementary services to SSASs which are provided in combination. Two of the services – professional trustee and scheme administrator services respectively – are both required throughout; actuarial services are provided as and when required. Because of the different nature of the three services, and because of statutory and governance requirements, these services are provided respectively by Congruent Trustees Limited, Congruent Administrators Limited, and Congruent Actuarial Limited. All three companies are 100% owned subsidiaries of Congruent Holdings Limited and together with other companies constitute the Congruent Group.
We aim to be transparent in the pricing for these services – fixing the cost in advance where possible. Please see related document for a breakdown of our fees for our SSAS offering.
A SSAS provided by Congruent is established by a Trust Deed and Rules with a distinguishing name, such as ABC Pension Scheme that may require its own Legal Entity Identifier (“LEI”) – an LEI is a 20-character identifier that identifies entities that engage in financial transactions. Ownership of the assets of the SSAS vests in the Trustees acting together – consisting of the members (referred to in this context as Member Trustees) together with the Professional Trustee.
The Employer decides who to invite to be members. The Employer and/or members make decisions about how much money to pay into the SSAS (subject to applicable limits) and when to do this. Payment of money into the SSAS, once made, cannot be reversed – the money no longer belongs to its previous owner (this might potentially be challenged in the event of insolvency). As the owner of the assets the Trustees, acting together, are responsible for all other decisions including investments and payment of benefits as well as paying for required advice and financial and professional services.
The reason for having a Professional Trustee is to assist the Employer and/or Member Trustees to be assured that decisions are sound. The requirements of Trust Law, HMRC, and the Pensions Regulator must be met at all times – and there are other legal requirements and other regulators – such as the Information Commissioner and the Financial Conduct Authority. Because of the different interests of the employer and the different members the decision-making arrangements can be complex and the Professional Trustee effectively exercises a veto (which must be exercised taking into account all the relevant considerations).
Congruent Trustees Limited has an ongoing responsibility to ensure that it has, at all times, the knowledge and expertise to perform the functions of Professional Trustee. Congruent meets these requirements and is recognised as doing so as part of a professional actuarial group. Sometimes the Trustees may need to seek taxation advice or legal advice about exercise of their responsibilities. Sometimes the Professional Trustee will need to insist on this.
HMRC require that a Scheme Administrator is appointed. This is somebody (usually a corporate body) that is responsible for reporting details of the operation of the SSAS to HMRC – in particular that it is complying with all the requirements or to report to HMRC where the SSAS has failed to do so (with penalties – which can be very severe – if the Scheme Administrator does not provide a report that it is required to provide).
The Trustees, acting together in relation to any decision, also need somebody to coordinate the making and documentation of their decisions (including ensuring that records separately identify each Trustee’s involvement) and then putting the decisions into action – those roles are delegated to the Scheme Administrator. These responsibilities of the Scheme Administrator may be labelled governance and administration respectively – they are essentially two different responsibilities – first ensuring that decisions are properly taken and second ensuring that administration responsibilities are carried out.
Just as Congruent is recognised as having the knowledge and expertise to perform the functions of Professional Trustee it is also recognised as having the knowledge and expertise to perform the functions of Scheme Administrator. The investment flexibility provided by a SSAS can include investment in commercial property and ownership of shares or other marketable securities as well as operation of a bank account or accounts. Ownership of commercial property involves a range of responsibilities including appointment of property managers (which might include the Employer and/or Member Trustees) – the Scheme Administrator ensures that delegation is clear and that record keeping is complete. Ownership of shares and other marketable securities also includes receipt of income such as dividends, switching of investments, and investment of new money and the Scheme Administrator performs all the necessary processes in accordance with the instructions of the Trustees, acting together, and within any authority delegated to them in this respect.
Investment decision-making may require timeous, organised financial information including the cash position and cash flow forecasts and may also include pre-determined investment programmes and management of scheduled cash demands. These are administrative functions that the Scheme Administrator fulfils. Comprehensive record keeping and making of information available in a structured and timeous way, not only to the Trustees but also to the Employer and to members (in their capacity of beneficial owners of those of the assets held for the eventual provision of their benefits or during the payment of benefits), is essential. The Scheme Administrator undertakes this duty and in order to do so operates specialist software that is developed by Congruent (and owned by Congruent Risk Limited).
An additional dimension sometimes arises in relation to the Scheme Administrator’s administration responsibilities and that is where individual Member Trustees have notified the Scheme Administrator that they have appointed advisers to give them professional investment advice. The Scheme Administrator may then be required to provide structured timeous information to the advisers.
Obviously, Congruent Administrators Limited has an ongoing responsibility to ensure that it has not only the knowledge and expertise to perform the functions of Scheme Administrator but also advanced systems to provide comprehensive and timeous information to support advice given to Member Trustees by their financial advisers and to support decision making by Member Trustees.
A SSAS ring-fences the money and assets relating to each member. Benefits are limited to what is held for that member. There is no open-ended “sponsorship” by the Employer (whereby the Employer could make a commitment to pay in further money so that a specified level of benefits can be paid). However financial planning can still be required, for example an employer may want to pay in an amount estimated as sufficient (on an agreed projection basis) to provide a particular level of benefits and sometimes it is decided that the Employer will provide a “benefit promise”or the SSAS itself may be required by legislation to engage and act on the advice of a qualified pensions Actuary.
Where actuarial advice is needed Congruent can provide this.