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   Director SSAS
  Director SSAS   "A SSAS can be an efficient vehicle for pension planning"

For a small business a SSAS can represent the ideal pensions vehicle to accumulate wealth tax efficiently. The scheme can make loans or borrow to purchase assets such as commercial property, invest in a wide range of investments and at retirement take 25% as tax free cash and pay an income.
  Introduction   Establishing a SSAS   Funding basis
  Permitted investments   Who can have a SSAS   Taking benefits
  Prohibited investments   Bespoke SSAS schemes   Pensioneer trustee
  Corporation tax relief   Insured SSAS schemes   Pre 1989 contracts

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For the family operated company or entrepreneurial director the SSAS is the most effective pension vehicle for long term planning and family protection, for short term company planning with respect to flexible investment options and also the significant pre-retirement tax planning and savings.

The Finance Act 1973 made it possible for controlling directors to join occupational pension schemes and the small self administered scheme was created for this purpose. The Pension Schemes Office (PSO) introduced the concept of the pensioneer trustee (PT) with the Association of Pensioneer Trustees (APT) being formed in 1979. The PSO also issued memorandum no. 58 this being the main guidance for the operation of a SSAS until August 1991 with the introduction of Statutory Instrument 1614, The Retirement Benefits Schemes (Restriction on Discretion to Approve) (Small Self Administered Schemes) Regulations 1991. The PSO was replaced on 1 April 2001 by the Inland Revenue Savings, Pensions, Share Schemes (IR SPSS).

As a SSAS is an occupational pension scheme it is subject to the Pensions Act 1995. Certain provisions apply to all SSAS, such as the jurisdiction of the Occupational Pensions Regulatory Authority (OPRA), limited price indexation (LPI), disclosure of information, trustee duties and equal treatment provisions. If the SSAS meets certain conditions then they can be exempt from provisions of the Pensions Act 1995.

The official definition of a SSAS is 'a scheme with less than 12 members where at least one of those members is connected with another member, or with a trustee of employer in relation to the scheme'. Inland Revenue memorandum 109, August 1991, also adds 'a scheme is defined as self-administered if some or all of the income or other assets are invested otherwise than in insurance policies'.

Who can have a SSAS
Due to the higher investment risks associated with a SSAS, membership is usually restricted to controlling directors. The number of members is limited to 11 and one or more of the members must be connected. This means it is often the case that private family operated companies opt for a SSAS and there are typically only 2 or 3 members.

The IR SPSS could consider membership of 12 or more to be a SSAS if it deemed the numbers were increased to avoid SSAS regulations. It is possible for a public limited company to operate a SSAS where one or more of the members are connected. In all situations only one SSAS is permitted per company and it is possible for a single SSAS to be available for a number of associated companies.

Establishing a SSAS
A SSAS ia an exempt approved occupational pension scheme that must be established under an irrevocable trust with associated trust deed and rules.

To benefit from exemption of some of the provisions of the Pensions Act 1995, the trust rules must provide for decisions made by unanimous agreement. In most cases the trustees are all the members plus the pensioneer trustee and all members must be given written notification of the scheme details and benefits thereof.

It is important to establish a bank account in the name of the trustees so that the assets of the company are kept separate from those of the SSAS members. At all times the Inland Revenue require that the PT is a co-signatory of the bank account.

When the SSAS is submitted for approval to the IR SPSS it must be accompanied by an actuarial valuation report (AVR). This report will detail the members income, ages, retirement age, the maximum funding limits, assumptions made to determine the limits, the initial contribution rate and how the assets are invested.

Pensioneer trustee
The IR SPSS require that every SSAS appoint a pensioneer trustee (PT), an individual or company that usually is also a member of the Association of Pensioneer Trustees (APT). The APT aims to maintain the highest possible professional standards and has 200 members including 35 insurance companies.

These members have been granted their status as a PT from the IR SPSS in part because of their ability to negotiate with this and other government departments. The PT is also considered experienced in administering a SSAS and is expected to ensure the SSAS complies with all rules and regulations. A pensioneer trustee therefore acts as a watchdog for the IR SPSS.

The Finance Act 1998 introduced rules that mean the PT appointment cannot be terminated without first appointing another PT to the position, except where the scheme complies with the winding up rules, in an attempt to prevent SSAS busting.

The Pensions Scheme Office further sought to strengthen the position of the PT in Update 69 which required the pensioneer trustee to be the co-signatories of the SSAS bank account and co-owners of the SSAS assets. This means that the SSAS pension fund cannot make purchases or sell assets without written authority from the PT, and this thereby strengthens the role of the pensioneer trustee and expands their role to beyond the winding up of a SSAS.

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