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NEWSLETTER: HMRC tightening up on SSASs, unregulated product providers targeting PSLS, recycling issues, and an international pension conference

Contributed by MW Pensions
06 June, 2014

SSASs - HMRC to crackdown on any SSAS without a professional Scheme Administrator

From September 2014 HMRC will require all scheme administrators of SSASs to be ‘fit and proper persons’, with sufficient knowledge of pensions tax legislation and related duties and liabilities. Under the new rules either the Scheme Administrator must meet the fit and proper test themselves or they should “retain the services of a professional adviser to act in such a capacity to fulfil this role”. Existing SSASs which have been administered without the involvement of a professional Scheme Administrator may be facing hefty fines.

HMRC’s reasons for doing this are twofold. First, it has been known for some time that they are (understandably) uncomfortable with SSASs that have no professional trustee and/or Scheme Administrator. In those schemes the members themselves usually control the assets, including the bank account.

Secondly, HMRC are concerned about potential abuse of SSASs for pension liberation. It will have a new power to reject a scheme if their investigations suspect it was set up “for purposes other than that of providing pension benefits”. New penalties for false information of up to £3,000 will also be introduced in connection with the registration application.

If advisors have SSAS clients who do not have a professional Scheme Administrator they may wish to strongly recommend that they appoint one. We can provide a Scheme Administration service for just £950 + VAT per annum. If we are also to be a professional trustee, the fee increases to £1200 + VAT per annum. And there is no take on fee for an existing SSAS. Feel free to contact us for more details. 

The latest “unregulated” attack on pensions

It has been reported that some product providers of unregulated investments are making cold calls to members of the public, “advising” them if they are over 55 to take their pension commencement lump sum and invest it in their unregulated product – no doubt promising them “guaranteed” returns of 10% or 20% or even more per annum. This is no doubt as a result of the considerable tightening up of such unregulated investments within SIPPs, which will have led to a curtailment of such SIPP investments within SIPPs. Advisors may wish to warn their clients of such potential calls.

Recycling of pension commencement lump sums

Whilst on the subject of (tax free) pension commencement lump sums, we remind advisors that HMRC impose tax penalties if a PCLS is used for recycling as an additional pension contribution. This is because HMRC do not want to give additional tax relief on monies that the member has received tax free.

The rule is a simple one: if a member’s “normal” pension contribution increases by more than 30% as a result of the use of money they have received from a PCLS, a tax charge will apply. The “normal” pension contribution is determined over a period of time which includes:

a. The tax year in which they take tax free cash

b. The two tax years before they take the tax free cash

c. The two tax years after they take the cash.

Remember that the pension contribution is not limited to the member’s own contribution but also includes payment made on their behalf by a third party eg their employer.

The penal tax charge can be high. Any of the following charges could apply,

  • An unauthorised member payment income tax charge of 40% of the tax free PCLS originally taken.
  • A further unauthorised member payment income tax surcharge of 15% of the PCLS originally taken.
  • A scheme sanction charge, payable by the scheme administrator, of up to 40% of the PCLS originally taken.

The surcharge is only payable if the total unauthorised payment paid in a 12 month period is greater than 25% of the member’s pension fund.

The scheme sanction charge may not be payable if the pension scheme administrator has not been told by the member that they have recycled the tax-free cash.

If any part of the tax free cash sum has already been subject to a lifetime allowance charge, the unauthorised payment charges will not apply to that part

International pensions and QROPS/QNUPS after the Budget

As part of the International Festival of Business being held in Liverpool in June and July 2014, our Isle of Man sister company, SIPP Specialists Ltd is taking part, together with KPMG and Quilter Cheviot, in a presentation on international pensions and pensions for expats. It will cover:

  • IOM Registered International Pensions: suitability and potential advantages for:
  • employers with international employees
  • individuals resident abroad
  • non-domiciled UK employees
  • UK residents exceeding contribution limits
  • Update on QROPS and QNUPS including:
  • Effect of the 2014 UK Budget
  • Strengths and weaknesses of the jurisdictions
  • Current position re EFRBS
  • Taxation and residency issues for international employers and employees and those who decide to retire outside their home country
  • Tailoring investments for international employees and those who plan to or have retired outside of their home country

The presentation will be held at the offices of Quilter Cheviot, 5 St Paul’s Square, Liverpool L3 9SJ. It will take place from 11.am to 12.30pm on Wednesday 2nd July. Tea and coffee will be available from 10.30am with a buffet lunch to follow.

We are delighted that Mr John Shimmin, Minister for IOM Department of Economic Development, will be present to welcome delegates. CPD Certificates will be available.

To register, please email paul.ruscoe@quiltercheviot.com


Gilt Yield for Drawdown

The gilt yields to be used for drawdown calculations are:

April 2014


May 2014


June 2014



We do not give financial advice and no comments here are intended as such. The above information is based on our understanding of the legislation governing pensions at the time of writing.  Before taking any action you should consult a qualified financial and/or tax adviser. Levels, bases of and reliefs from taxation may be subject to change.

This Newsletter is intended for professional advisors only, not members of the general public

June 2014


MW Pensions Ltd
Oaklands Park
Hooton Road, Hooton
South Wirral CH66 7NZ
Tel: 0151 328 1777  Fax: 0151 328 0707  
website: www.mwpensions.co.uk e-mail: admin@mwpensions.co.uk

Authorised and Regulated by the Financial Services Authority



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