SSASs have lived through many legislative changes and economic cycles, holding steady despite predictions of their demise after A-day in 2006. But while that day did not chime the death knell for SSASs, it did cause significant change.
The bespoke product has been serving pension holders for many years. Conceived in the Finance Act 1973, it could arguably stake a claim to a 40th anniversary this year, shadowing the 22 years claimed by its cousin, the self-invested personal pension (Sipp).
But it has not always been plain sailing. Since 6 April 2006, there has been no requirement for a SSAS to have an independent pensioneer trustee to manage its administration. While some SSASs have continued employing an independent administrator, others elected to save costs and perform the duties themselves. This has led to a raft of SSAS orphans, many of whom get themselves into difficulty by accidentally falling foul of the rules.
Background
As with Sipps, SSASs evolved from a time when they were largely governed by legislation invoked by the discretion of HMRC (then the Pension Schemes Office) and principles set out in Joint Office Memorandum 58.
The role of pensioneer trustee was created at the outset and made compulsory for the initial and continued approval of a SSAS. A pensioneer trustee was an HMRC-approved individual or company, whose primary role was to prevent the inappropriate wind-up of the scheme and distribution of its assets other than in accordance with the scheme’s trust deed and rules.
In practice, however, the pensioneer trustee role extended beyond these explicit and important duties. The Finance Act 1998 made it impossible for a pensioneer trustee appointment to be terminated other than when it was directly replaced. The role was strengthened further by the issue of Pension Schemes Office update number 69, which required the pensioneer trustee to be a compulsory signatory on scheme bank accounts and co-owner of scheme assets. At this point, it was clear the pensioneer trustee, in addition to their primary duties, was usually providing much of the scheme’s reporting and administrative roles.
But the position was effectively removed by the Finance Act 2004 as part of the much larger pensions simplification process. From its implementation in 2006, it instead introduced a new role – the administrator.
Shifting responsibility
With no more legal requirement for a professional or independent trustee, many SSAS clients from A-day onwards have taken the opportunity to save costs and either remove, or simply not replace, any previous pensioneer trustee. While SSASs remain under the duty of trust law – requiring the scheme to be run in accordance with its deed and rules – the bulk of responsibilities now sit with the administrator.
The administrator responsibilities are:
• Registering the scheme with HMRC;
• Paying certain tax charges;
• Providing information to HMRC, scheme members and other pension schemes.
Unless the role of administrator is specifically outsourced, it collectively lies with the scheme’s trustees. In accepting the role, a lay trustee must declare that they:
• Understand the responsibilities for carrying out the function in accordance with the Finance Act 2004;
